My post of September 6, 2013, “Heat on Offshore Tax Evaders Turned up: DOJ Offers Swiss Government Sanctioned Deal to Smaller Swiss Banks,” described in some detail the Swiss Bank Settlement Program (SBSP) under which Swiss banks not already under DOJ criminal investigation could avoid possible prosecution by entering the SBSP.  To qualify a bank had to file papers by December 31, 2013 indicating its intent to enter the program and agreement to cooperate with DOJ by submitting, along with other information, names of US depositors.  Those banks accepted into the program that have violated US. Law would receive a non-prosecution agreement, and, unlike the now defunct Wegelin Bank, thereby avoid indictment.

On February 4, 2014, the DOJ announced that 106 Swiss banks have requested participation in the SBSP.  These banks will not be prosecuted by the DOJ only if they comply with the terms of the SBSP.  Thus, you can be sure that the banks will strictly adhere to the program’s requirements.

With so many banks participating, the DOJ and IRS are about to haul in a huge treasure trove of information about U.S. depositors and , persons who assisted U.S. depositors in evading U.S., tax including, account managers, client advisors, asset managers, financial advisors, trustees, fiduciaries, nominees, attorneys accountants or any other individual or entity that helped U.S. depositors evade tax.  These names and contacts will result in prosecutions of many of the named individuals.  The names and contracts will also be entered into the IRS E-Trak data-base that assists IRS in identifying other offshore tax scofflaws.

Many Swiss banks entering the program have or will be submitting letters to their clients informing them of the bank’s participation and advising them to enter the IRS Offshore Voluntary Disclosure Program (OVDP).

What does this development mean for those still out in the cold?

The DOJ has said, “The Tax Division is committed to using every tool available to identify, investigate and prosecute those who hide income and assets in offshore bank accounts.” (See DOJ Press Release, “First Deadline Approaches for Participation in the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks,” 12/12/2013).

  • Clearly, the DOJ is not pulling its bloodhounds off the search for those hiding unreported offshore bank accounts.
  • Clearly, the Swiss banks entering the SBSP will cooperate with DOJ.
  • Clearly, information obtained by DOJ through the SBSP will expose many U.S. offshore depositors to immediate threat of criminal prosecution and disqualify them from entering the IRS OVDP.

What should U.S. persons with unreported offshore accounts do?

Do what is rational and sensible: retain experienced tax counsel and consider entering the OVDP as soon as possible.

 What should persons with unreported offshore accounts not do?

    •  Move Swiss bank funds to another tax haven jurisdiction like Singapore.  Caveat:  IRS is pursuing so-called “leavers,” and moving the funds is an overt act that helps DOJ establish willfulness and the crime of tax evasion.
    • Assume you will not be found out because your account is in the name of a relative.  IRS will discover the beneficial account owner from facts that show who interacted with the bank, received distributions, etc. and assert that person is the real owner.
    • Do nothing – employ the Ostrich tactic of sticking your head in the sand and hoping the scary problem will go away on its own accord. Once IRS or DOJ has your name, you will be disqualified from entering the OVDP.

© 2014 by Robert S. Steinberg, Esquire
All rights reserved


This entry was posted in 2012 OVDP, FBARS, NEW OVDP, OFFSHORE BANK ACCOUNTS, TAX, VOLUNTARY DISCLOSURE and tagged , , , , , . Bookmark the permalink.

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