Offshore Voluntary Disclosure of Swiss Accounts and the Program for Banks

Since September, an increasing number of my clients come to me with respect to the offshore voluntary disclosure of Swiss accounts. No doubt that the increase in the offshore voluntary disclosure of Swiss accounts comes from The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”) initiated by the U.S. Department of Justice (“DOJ”) on August 29, 2013. In this article, I will try to trace the precise influence of the Program on the offshore voluntary disclosure of Swiss accounts.

The Program

At the end of August of 2013, the DOJ, in cooperation with the Swiss government, instituted the Program. What is the Program? I describe it in detail in this article; for the purpose of the present writing, it is sufficient to state that the Program is essentially a voluntary disclosure program for Swiss Banks, not that dissimilar from the OVDP (the Offshore Voluntary Disclosure Program) currently available to U.S. taxpayers.

Essentially, in return for turning over very detailed information about their cross-border operations and U.S. accountholders with accounts over $50,000 (going back to August 1, 2008), the banks receive either a Non-Prosecution Letter or a Non-Target Letter which basically promises that the U.S. government is not going to criminally prosecute or target the participating banks. As in the OVDP, the Program excludes banks currently under the DOJ investigation from participating in the Program. Another similar with the OVDP feature – category 2 banks will pay a hefty penalty.

The Program Increases Pressure on the U.S. Taxpayers to Disclose

U.S. taxpayers with undisclosed bank accounts in Switzerland cannot personally participate in the Program. Nevertheless, the Program has a tremendously deep impact on these taxpayers.

First, under the Program, the Swiss banks should send out letters to all U.S. taxpayers with undisclosed accounts urging them to do the offshore voluntary disclosure of Swiss accounts. The Swiss banks are not only required to do so, but may actually benefit if the U.S. taxpayers enter the OVDP (due to potential penalty reductions).

Second, the participating Swiss banks should turn over very detailed information with respect to U.S. taxpayers and their Swiss accounts. Hence, there is a tremendously high risk of exposure for all U.S. taxpayers with undisclosed Swiss accounts. Moreover, if the IRS receives the information from the Swiss banks about a U.S. taxpayer’s accounts before such taxpayer enters the OVDP, then the IRS is likely to disqualify such U.S. taxpayer from participating in the OVDP.

Finally, because the participating Swiss banks should further disclose various information related to how they obtained business from U.S. taxpayers in the past, it is likely that the IRS will be able to identify the non-compliant accounts indirectly (i.e. even if a taxpayer is not directly identified by the participating Swiss Bank). This means that U.S. taxpayers who indirectly own undisclosed accounts in Switzerland are also at high risk of detection, investigation and, ultimately, criminal prosecution.

Offshore Voluntary Disclosure of Swiss Accounts

As the number of options narrow for U.S. taxpayers, they should seriously consider doing an offshore voluntary disclosure of Swiss accounts.

Be careful, however, not to fall into the trap of thinking that OVDP is the only way to disclosure your Swiss accounts. The exact route of Offshore Voluntary Disclosure of Swiss accounts is likely to depend on the individual circumstances of your case and other venues may be open to you, even though they are not described in the letter that you may have received from a Swiss bank. You should consult an experienced international tax attorney in this matter.

Contact Sherayzen Law Office for Professional Guidance on the Offshore Voluntary Disclosure of Swiss Accounts

If you are thinking about conducting an Offshore Voluntary Disclosure of Swiss Accounts, contact Sherayzen Law Office for professional help. Our law firm specializes in helping people like you!