The Department of Justice (DOJ) website correctly states that the division’s investigations encompass “an ever-widening circle of banks.” Recent events prove this statement true.
Investigations are under-way on 14 of the largest banks in Switzerland, and banks in India, Israel and other countries. IRS and DOJ are pursuing these investigations from both ends of the spectrum; that is, seeking information from the foreign banks directly while also seeking names of U.S. customers from U.S. correspondent banks of at least two foreign banks suspected of assisting U.S. customers to evade tax (see post of November 20, 2013, “Latest DOJ Attack on Offshore Accounts: John Doe Summonses Issued to U.S. Correspondent Banks of Offshore Banks”).
The assault on offshore tax evasion now includes a joint Bank Settlement Program announced on August 29, 2013 under which the Swiss are encouraging banks not already under IRS investigation to come forward with names and other cooperation in exchange for not being investigated like Frey Bank or indicted like Wegelin Bank, both of which closed as a result of DOJ pressures.
Today the DOJ announced that the first deadline of December 31, 2013 is approaching for non-prosecution agreements or non-target letters for banks that enter the Settlement Program. It was expected that eligible Swiss banks would wait until the last moment to decide whether to participate or risk investigation and prosecution and one would expect banks to start signing on. Most of the 300 or so smaller Swiss banks are in the end expected to participate to avert the risk of prosecution of the banks and top officers. The Wall Street Journal announced today that three banks have joined the program: Valient Bank, Berner Kantonalbank and Vontobel bank.
Regarding India, Tax Analysts reported on November 13, 2013 that a supervisory revenue agent with IRS Small Business/ Self Employed Division’s special enforcement program (SEP), spoke at an event in California and indicated SEP will soon begin examining U.S. taxpayers suspecting of owing unreported accounts with Indian Banks. California has a large Indian population. The agent also said IRS agents have been instructed to be especially harsh and not show leniency when determining FBAR penalties in examinations of quiet disclosures. It remains to be seen, however, whether IRS will, in fact, seek to punish taxpayers who make quiet disclosures where aggravating factors, such as overt acts (e.g., use of nominee title holder) in furtherance of an attempt to evade taxes, are not present.
If you are still out in the cold with an unreported offshore bank account, now is the time to consult with an experienced attorney familiar with voluntary disclosures and the benefits and detriments, as applicable to your particular situation, of entering the OVDP or disclosing and coming into compliance in some other manner. No two cases are alike and only a mature attorney, possessing sound judgment and experienced in these matters, can properly evaluate your circumstances and help you to proceed along the least painful and least risky path to disclosure.
© 2013 by Robert S. Steinberg, Esquire
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