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Credit Suisse has attracted the attention of the IRS, DOJ, and other regulators for years. In particular, starting in the years following the Great Recession, Congress determined that wealthy Americans who stashed wealth in foreign accounts to evade taxes were the primary driver of the “tax gap.” The tax gap is the difference between projected tax revenues and the amount of taxes that are actually collected.
Due to this belief, Congress strengthened existing foreign account disclosure laws and passed new laws requiring additional offshore account disclosures. As to the former, Congress enacted a penalty to punish failures to file Report of Foreign Bank Account (FBAR). As to the latter, Congress then passed FATCA in 2010. Additional enforcement efforts, such as the Swiss Bank program, targeted noncompliance at the financial institution level. All the while, the U.S. government has negotiated and ratified treaties with more than 100 nations to permit the sharing of tax data.
In short, the U.S. government has taken numerous steps to identify and prosecute taxpayers who attempt to evade taxes by stashing wealth and assets in overseas accounts. A recent raid on several branches of Credit Suisse bank signals that regulators are keeping a close eye on the activities at the bank. U.S.-linked Credit Suisse account holders should immediately engage in an offshore compliance review to avoid a potential worst-case scenario regarding your offshore accounts.
Credit Suisse has confirmed that bank branches in London, Paris, and Amsterdam were raided on March 31, 2017, because of suspected links to tax evasion. The raids resulted in the seizure of property including luxury items such as gold bars, paintings, and jewelry. When held in foreign financial accounts, even tangible assets can become subject to FBAR and FATCA reporting.
The investigation is currently being spearheaded by European authorities in the Netherlands, France, Germany, and the U.K. However, these nations are tax treaty signatories with the United States. International governmental agreements (IGAs) are in effect with these nations that could, theoretically, lead to sharing this tax information with the United States. Alternatively, Credit Suisse is still subject to the terms it agreed to under the Swiss Bank Program.
In addition to a 2014 guilty plea and a $2.6 billion settlement with U.S. authorities, Credit Suisse is subject to the terms of the Swiss Bank Program. In 2015, DOJ announced that Credit Suisse agreed to several conditions to settle concerns relating to the bank’s cross-border activities. These terms and conditions obligated the bank to provide information regarding existing cross-border banking activities. The bank was required to provide information to U.S. authorities regarding U.S. linked accounts. Furthermore, the bank agreed to a continuing obligation to agree to requests for information under applicable tax treaties.
All situations are different. Your risk of facing an offshore account enforcement action is a function of whether you took a conservative or aggressive approach to offshore account disclosures. If you have filed FBAR and FATCA each year an obligation to disclose existed, you are unlikely to run into issues. However, it is still prudent to have a tax professional review your situation. If compliance issues exist despite your best efforts to comply with FBAR and FATCA obligations, a tax attorney can assist with a voluntary disclosure filing. When there is little risk of your actions being viewed as “willful,” then the Offshore Streamlined Voluntary Disclosure program can allow a taxpayer to come back into compliance with the law with reduced fines and penalties. For taxpayers living abroad, no offshore penalty applies.
However, if you engaged in more aggressive tax avoidance actions that may cross the line into potential tax evasion, you should speak to a tax attorney immediately. When there is a potential criminal tax concern, only standard OVDP should be considered. Even then, a taxpayer should not proceed without the careful guidance of a tax attorney.
U.S. citizens and taxpayers who hold offshore Credit Suisse accounts should engage in a methodical foreign account compliance review as soon as possible. The tax lawyers of the Tax Law Offices of David W. Klasing can assess your risk and assist you in coming back into compliance while mitigating the potential consequences. To schedule a confidential reduced rate consultation, please call 800-681-1295 or schedule online today.