In the past, Switzerland had legal policies in place that protected the identities of Swiss bank account holders. It was actually a crime to reveal the identity of the person behind a Swiss bank account. This led to many wealthier Americans placing their money in Swiss banks to hide assets from the U.S. government and avoid paying taxes on their undeclared offshore investment income. However, the Swiss laws which protected account holders’ identities are no longer effective. This leaves many Swiss bank account holders wondering if information about their assets is being delivered to the IRS.
As of 2022, information about your Swiss bank account must be handed over to the IRS in the United States. The IRS is responsible for collecting taxes and assessing the wealth of Americans, even wealth held in Swiss bank accounts must be accounted for. There are now plans and agreements in place between the United States and Switzerland that facilitate the exchange of this information.
If you have bank accounts in Switzerland, you will need to disclose information about your accounts to the IRS when you file your taxes. Our international tax lawyers can work toward getting you in compliance with the IRS’ reporting rules. For a consultation about your case, please call The Tax Law Offices of David W. Klasing at (800) 681-1295.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
There are a few different ways in which information about your Swiss bank account could be handed over to the IRS in the United States. First and foremost, you are responsible for delivering this information to the IRS yourself. When filing your taxes and reporting your finances and income, you must include foreign bank accounts. Hiding money offshore is a big problem and the United States government will crack down on you if they find out. Second, the Swiss government may be obligated to hand this information over to the United States under the Foreign Account Tax Compliance Act (FATCA).
When filing your taxes, you must include information about offshore accounts, including Swiss bank accounts, in something known as a Report of Foreign Bank and Financial Accounts (FBAR). FBARs are required if the filing taxpayer is a U.S. person with financial interests in accounts in foreign countries with an aggregate value of over $10,000. Failure to file an FBAR may result in civil or even criminal penalties.
FATCA may also be used to inform the United States government of your foreign accounts. FATCA was developed to combat tax evasion by storing finances in offshore banks. Switzerland was a popular place to do this because Swiss banks employed a banking secrecy system under which the identities of account holders could not be revealed. FATCA not only requires taxpayers to fill out additional forms to their FBARs but may also allow Swiss banking institutions to report information directly to the IRS. Reporting thresholds for FATCA will vary depending on your circumstances, so it is imperative that you speak with our dual licensed International Tax Attorneys & CPAs as soon as possible about your foreign accounts.
The exact nature of the penalties assessed against you may depend on multiple variables and can be civil, criminal, or both. Failure to disclose information about foreign assets, like Swiss bank accounts, may be perceived as tax evasion or fraud. It is possible that you could be required to pay expensive civil fines and fees and serve a prison term.
If you end up facing criminal charges, the willful evasion of taxes may be charged as a felony and subject to penalties, including a fine of up to $100,000 and up to 5 years in prison. If you are not charged with felony tax evasion, you could still face misdemeanor charges for failure to file your taxes or supply all the necessary information. If you believe you may be facing penalties for not reporting your foreign assets, speak to our California tax lawyers immediately.
If you do end up facing penalties for a failure to report your foreign accounts to the IRS, you may want to consider making an offshore voluntary disclosure. Voluntary disclosures are when you take steps to formally notify the IRS of your foreign accounts or assets that you previously failed to report. The great thing about voluntary disclosures is that the government will waive criminal tax and foreign information criminal prosecution in exchange for your cooperation.
Making a voluntary disclosure not only involves informing the IRS about your Swiss bank account, but also making a good faith effort to pay back any taxes you owe and pay off any fines or penalty fees. In addition, you must make the disclosure before the IRS catches wind of your foreign assets. If the IRS finds out on its own about your Swiss bank account and initiates legal proceedings against you, it may be too late to take advantage of a voluntary disclosure.
Voluntary disclosures are not guaranteed, and you must be approved to take advantage. You must also meet specific eligibility criteria, including being free from any audits or pending criminal tax investigations. Voluntary disclosures are a viable option for people whose failure to report their Swiss bank account was willful. For people whose failure to report was merely an oversight or mistake, you may take another route, such as amending your tax returns. Keep in mind, if your actions were indeed willful, an amended tax return could be used as an admission of wrongdoing and make you vulnerable to criminal penalties. Our dual licensed International Tax Lawyers and CPAs can provide you with detailed information about the various program to come back into compliance regarding offshore tax and information reporting.
If you have failed to file a tax return for one or more years or have taken a position on a tax return, especially where offshore taxable income was not reported coupled with related but non-filed foreign information returns, that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
If you hold a Swiss bank account, it is essential to report your account to the IRS. If you fail to report your foreign assets, the U.S. government has ways of finding out the truth and you could face serious criminal and civil penalties. For help with your case, contact our dual licensed International Tax Attorneys and CPAs by calling (800) 681-1295 or scheduling online today.