Recently, we have extensively discussed the enactment of laws such as Foreign Accounts Tax Compliance Act (FATCA) designed to bully foreign banks into assisting the IRS ferret out U.S. payers avoiding taxes by stashing money in foreign accounts. On Monday, June 23rd, 2014, the Swiss Federal Council took a large step towards compliance with FATCA as well as agreements with many other countries by revising its Tax Administration Assistance Act of 2014.
This revision “includes a provision that envisages a procedure with, in exceptional cases, deferred notification of persons entitled to appeal, as well as more precise specifications regarding group requests.” Meaning that the revision allows for a person to be notified only AFTER information has been disclosed to a requesting country’s authority in urgent cases, or if information would compromise an ongoing investigation.
What does this mean for you? If the IRS is investigating your Swiss bank, your Swiss bank can now disclose your information to the IRS before letting you know that someone has requested the information. David W. Klasing says that according to the 2012 Offshore Voluntary Disclosure Program (as amended in 2014), someone is subject to criminal liability for failure to report offshore accounts to the IRS and can be criminally subject to 3 to 5 years in prison and 150% of the account value among other civil and criminal penalties including the cost of prosecution. However, in order to save themselves from this punishment a person must make their noisy declaration of accounts voluntarily. With this revision to Swiss law, you may have zero notice that you or your banks are being investigated, but your information can be disclosed to the IRS.
This revision moves Switzerland further into compliance with the Organization for Economic Cooperation and Development standard for disclosure of financial information.
This is further concrete evidence that the available time to make an effective voluntary disclosures is getting short especially with the 27.5% FBAR penalties going to 50% for banks under current criminal. Klasing recommends that those with offshore accounts voluntarily disclose them before the IRS finds out. With recent information sharing agreements and todays legislative revision by Switzerland as an example of changes to bank secrecy laws worldwide, it is increasingly getting easier for the IRS to find you.
At the Tax Law Offices of David W. Klasing, we have you the OVDP experience to help you make your disclosure and avoid prison time while minimizing monetary penalties. Our team of CPA’s and tax attorney’s will work diligently to file your disclosure before penalties increase, but more importantly before the IRS hears about you!!!