The Department of Justice announced today that BNP Paribas (Suisse) SA (BNPP), KBL (Switzerland) Ltd. (KBL Switzerland) and Bank CIC have reached resolutions under the department’s Swiss Bank Settlement Program. These banks will collectively pay penalties totaling more than $81 million and continue to cooperate with the department.
Swiss Banks are rapidly resolving their cases with the Department of Justice under the Swiss Bank Settlement Program. With each new bank case resolution, depositors who have not yet entered the Offshore Voluntary Disclosure Program or employed the Streamlined Filing Compliance Procedures come closer to a day of reckoning.
The DOJ continues to aggressively pursue tax dodgers with offshore accounts:
The DOJ states:
“As reflected in today’s agreements, we continue to shine a bright light on the individuals and institutions that have used so-called ‘secret Swiss bank accounts’ to engage in and assist U.S. tax evasion,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “The department, working hand in hand with the IRS, is actively pursuing criminal and civil cases against those engaged in such conduct.”
Swiss Bank Settlement Program:
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the DOJ by Dec. 31, 2013, that they had reason to believe that they had committed tax related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
How the Swiss Banks are cooperating:
Under the program, banks are required to:
- Make a complete disclosure of their cross-border activities;
- Provide detailed information on an account-by-account basis for accounts in which U.S.
- taxpayers have a direct or indirect interest;
- Cooperate in treaty requests for account information;
- Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
- Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
Swiss Banks are encouraging U.S. customers to enter the OVDP:
In accordance with the terms of the Swiss Bank Program, each bank can mitigate its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. U.S. accountholders at banks, that have signed NPAs with the DOJ, who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, but the price of amnesty from criminal prosecution and maximum FBAR penalties is higher.
Disclosure of settlement by DOJ and bank means higher OVDP penalty for its depositors:
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.
The DOP announcement of these three new non-prosecution agreements is a public disclosure that triggers the 50 percent penalty. Thus, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
DOJ and IRS use of information obtained:
“Today’s resolutions with large and small financial institutions reflect the Swiss Bank Program’s continued success,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division (LB&I). “Working with the Department of Justice, we will use the information received from these resolutions to track down U.S. taxpayers who sought to evade taxes by hiding their assets in offshore accounts.”
“The amount of money associated with each agreement is not insignificant, but even more significant is the amount of data that we will receive as a result of the Swiss Bank Program,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “At this point, we’ve already learned so much about the formerly hidden world of offshore banking. This information enables us to vigorously pursue noncompliant individual U.S. taxpayers and guides us in the development of innovative partnerships and methodologies to combat a wide variety of international tax evasion techniques.”
Anyone still out there with an unreported offshore account who thinks they are invisible is sadly mistaken. The writing is on the wall. IRS and DOJ are shaking the trees for the remaining fruit and will continue to intensify efforts until the trees have been picked bare. A wise captain changes course to avoid a forecasted storm. The el Faro captain stuck to his mapped course and took his ship and men into harm’s way.
If you are still out there, contact a tax attorney experienced in OVDP submissions and begin the process of coming into compliance. The OVDP is most appropriate for those who may have committed tax crimes. Other avenues for coming into compliance are available for less culpable actions.
Robert S. Steinberg, Esquire
AV rated (preeminent) by Martindale Hubbell