Taxpayers Beware: DOJ to Continue Investigating Offshore Tax Evasion Through Swiss Bank Program

On August 29, 2013, the Department of Justice (DOJ) introduced its “Swiss Bank Program,” which enables Swiss banks to avoid being prosecuted for helping U.S. persons conceal assets in offshore accounts. Once a criminal investigation is initiated, the bank loses eligibility for participation in the program, which gives Swiss financial institutions an incentive to be forthcoming. In October 2017, the DOJ’s Tax Division reiterated its commitment to the program – and to its ongoing effort to uncover offshore tax evasion – with an announcement that “a lot of litigation” would be initiated in the future. The bottom line for taxpayers? The DOJ is gearing up for another year of aggressive offshore tax compliance enforcement – and Swiss account holders should be especially wary but do not think just because your foreign account or income-generating asset is not in Switzerland you do not have to worry.

DOJ Investigations into Swiss Banks, Concealed Assets to Continue with Increased Litigation of Taxpayers, Foreign Financial Institutions

On October 27, DOJ officials announced that the Department’s Tax Division would continue the wave of recent investigations into U.S. taxpayers suspected of attempting to conceal assets in offshore accounts held with Swiss banks and financial institutions. Both the individual account holders and the financial institutions themselves are under fire from the DOJ, whose Swiss Bank Program has a dual purpose.

On one hand, the program extends a safety net to noncompliant banks, which can avoid prosecution – and with it, the risk of receiving harsh penalties – by voluntarily reporting their own criminal activities. (Similarly, individual account holders may avoid prosecution for tax crimes by making their own voluntary disclosures through the aptly named Offshore Voluntary Disclosure Program, or OVDP.) On the other hand, however, the program ensures serious consequences for Swiss banks which choose not to participate and comply. Likewise, individuals who conceal assets with noncompliant Swiss banks risk similarly severe penalties.

Where a taxpayer’s offshore noncompliance does not necessarily rise to the level of generating potential criminal tax exposure, which only a criminal tax defense attorney can gauge for you, the a domestic or expat streamlined offshore voluntary disclosure program may be a more affordable option with significantly less hoops to jump through.

Nanette Davis, senior litigation counsel for the DOJ Tax Division, made this amply clear with statements issued at a conference on international tax controversy, which was sponsored by the American Bar Association Section of Taxation and Tax Executives Institute Inc.

“We’ve learned a heck of a lot more about how people hide their money offshore and with whom they do it,” Davis told attendees, adding, “We’ve had a real window in what’s happened to that money”: namely conversion of assets into real estate, gold, jewelry, and other valuables.

As Davis cautioned, even institutions which initially resisted voluntary disclosure had changed, or were in the process of changing, their attitudes about cooperating with the DOJ.

“We’re going to engage in a lot of litigation,” Davis warned conference-goers, noting that DOJ prosecutors were paying special attention to taxpayers who transferred assets to friends and family overseas to avoid reporting income.  If this is your fact pattern, don’t make a bad decision worse by continuing to hide, contact our office today so that we can approach the IRS before they knock on your door.   At that point, none of the options discussed above are available to you and a criminal prosecution is potentially likely where significant badges of fraud are apparent in your fact pattern.

International Tax Attorneys Can Help You Report Foreign Income, Avoid Penalties

For institutions and individuals alike, Davis’ words are difficult to misinterpret – and potentially, very dangerous to ignore. If you believe you may have failed to disclose foreign income or assets, whether held at an institution in Switzerland, Luxembourg, the United Kingdom, or any other nation with which the U.S. has an intergovernmental agreement or is likely to have reported your foreign account to the IRS under FACTA, it is of the utmost importance that you immediately discuss your concerns with a knowledgeable and experienced tax attorney, like the skilled Attorney-CPAs at the Tax Law Office of David W. Klasing.

Providing tax services for expatriates, foreign companies, and U.S. citizens at home and abroad, our aggressive California tax evasion attorneys have extensive experience helping taxpayers navigate international tax laws while avoiding or minimizing the perils of noncompliance. We can clarify your income reporting obligations under tax laws like the Foreign Account Tax Compliance Act (FATCA), help you report foreign income by filing an FBAR (FinCEN Form 114) and Form 8938 (Statement of Specified Foreign Financial Assets), and review your options for making a streamlined disclosure, domestic streamlined disclosure, or offshore voluntary disclosure – all while vigorously protecting your best interests.

If the DOJ or Internal Revenue Service (IRS) is auditing or investigating you for failure to disclose foreign or domestic income or assets, there isn’t another moment to waste planning a robust legal strategy. To book a reduced-rate initial consultation with an experienced tax controversy lawyer serving Los Angeles, Orange County, and beyond, contact the Tax Law Office of David W. Klasing online, or call us at (800) 681-1295.

Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San BernardinoSanta BarbaraPanorama City, and Oxnard! You can find information on all of our offices here.

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