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Swiss Banks Ask DOJ to Ease Amnesty Requirements

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    The past few years have been rough for Swiss banks. Several banks have either pled guilty to U.S. crimes or have come to an agreement with the U.S. Department of Justice and agreed to pay fines and other penalties to avoid prosecution. Another way that Swiss banks have been ensuring that they are not criminally prosecuted in the United States is a non-prosecution program. This program provides amnesty to Swiss banks and consequently has been heavily utilized. Since its inception in 2013, approximately one-third of Swiss banks have joined. The crux of the deal is that the Department of Justice will agree to not prosecute the participating Swiss banking entities in exchange for full and total cooperation.

    DOJ Demanding Total Cooperation from Banks

    Until recently, it was unclear what exactly “total cooperation” meant. It has been somewhat clear that the banks would be expected to hand over account information relating to U.S. citizens, which will likely result in widespread domestic prosecutions for crimes relating to failure to disclose the existence of a foreign account to the IRS and failure to pay taxes on income derived from those secret accounts. But what has Swiss banks concerned are recently-released demands by the Department of Justice that seem to go well beyond the original scope of the agreement.

    Last month, several tax news sources pointed to a listing of demands made by the Department of Justice aimed at participants in the non-prosecution agreement. Several of the requirements concerned the foreign institutions enough to prompt their FBAR compliance attorneys to come together and draft a letter to the DOJ asking that several items be removed. A few of the more concerning requirements involve handing over even more account information to not only the U.S. but to other taxing authorities.

    According to the demands made by the DOJ to the foreign banking participants, Swiss account information would need to be given to the United States and any other taxing authority in the course of any investigation. Further, the Swiss financial institutions would be required to hand over information belonging to their parent entities. This type of free-flowing stream of information concerns the Swiss banks that initially wanted to partake in the amnesty program.

    How the U.S. Forms Tax Agreements with Foreign Governments

    Generally, when the United States wishes to enter into information sharing agreements, the executive branch will negotiate with the heads of state of another foreign country in an attempt to enter into an Intergovernmental Agreement (IGA) that usually includes the mutual sharing of information on a governmental level.  Here, it appears that the Department of Justice is attempting to effectuate an IGA –style information sharing agreement between Swiss banks and the rest of the world.

    Attorneys wrote that their Swiss bank clients “are participating in this program to obtain finality as to their own exposure”.  Though the DOJ can provide assurances that they will not bring charges against Swiss banks that participate in the program, they do not have the authority to make such guarantees on behalf of foreign governments that wish to bring their own charges after receiving information that the amnesty program requires the sharing of.

    Holders of Undisclosed Foreign Accounts in Real Danger

    All of this should be somewhat alarming to U.S. taxpayers that have undeclared foreign accounts. It is obvious that the Swiss financial institutions have no problem with forking over information regarding accounts held by Americans and it seems like regardless what kind of agreement is reached between the U.S. and the banks, such information will be freely available to the IRS Criminal Investigations Division and the Department of Justice. The penalties for not disclosing a foreign account include a lengthy federal prison sentence as well as fines and other civil penalties that could wipe a person / family out, financially.

    If you have a foreign account that hasn’t been disclosed to the government and has had a high-balance of at least $10,000, there is a way for individuals to enter into a similar agreement to avoid prosecution and some of the hefty penalties. The Offshore Voluntary Disclosure Program has allowed many taxpayers come clean with the government without breaking the bank. The program is subject to change at any time and cannot be entered into if the government has already received information about your foreign banking activity. Thus, taxpayers with foreign accounts are playing with an increasing amount of fire for every day that they go without participating in the OVDP.

    The experienced tax attorneys at the Tax Law Offices of David W. Klasing have helping taxpayers participate in the OVDP since its inception and can help you, as well. We will first determine if the Program is right for you and then help you every step of the way. When your freedom is at stake, having extremely competent and dedicated tax advocates in your corner can help you sleep better and preserve your net worth. Contact the Tax Law Offices of David W. Klasing today for a reduced rate consultation at (800) 681-1295.

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