Valiant Holding AG Enters DOJ Program for Banks; Others will Follow

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With the Swiss Financial Market Supervisory Authority (“FINMA”) deadline ending today on December 9, 2013, Valiant Holding AG made it official – it is the first bank to officially announce its intention to enter the The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). While the first one to do it, Valiant Holding AG will definitely not be the only bank to do it. As Sherayzen Law Office predicted earlier, there will be an avalanche of Swiss Banks following in the footsteps of Valiant Holding AG.

Background

On August 29, 2013, the U.S. Department of Justice (“DOJ”) and the government of Switzerland issued a joint statement instituting The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). Sherayzen Law Office, Ltd. has covered the specific details of the Program in a previous article. Essentially, the Program functions as a voluntary disclosure program for Swiss banks, similar to the US Internal Revenue Service’s Offshore Voluntary Disclosure Program (“OVDP”) now closed for U.S. taxpayers holding undisclosed offshore accounts. In general, in return for providing extensive disclosure of the accounts held by U.S. taxpayers, banks that qualify for the Program can avoid U.S. criminal prosecution.

As also explained earlier, the Program is only open to non-“Category 1” banks (fourteen Category 1 Swiss banks are already under criminal investigations by the DOJ, including Credit Suisse, Rahn & Bodmer, Zuercher Kantonalbank, Basler Kantonalbank, and Bank Leumi, among others). As I explained earlier in another article, under the Program, “Category 2” banks will face potentially substantial penalties.

There is actually fear that the costs of compliance combined with penalties will simply overwhelm a large portion of small Swiss banks, with some predicting the loss of at least one-quarter of the Swiss banks who enter the Program. It is not known whether Valiant Holding AG has sufficient resources to sustain the effort required to participate in the Program, though no one really raised this issue yet.

FINMA Deadline of December 9, 2013

According to Swiss regulatory officials, Swiss banks had it until today (December 9th) to notify the FINMA whether they intend to participate in the Program. This is why Valiant Holding AG announced its participation today.

FINMA Encourages Swiss Banks to Participate in the Program

Recently, various members of the FINMA, such as their CEO, Dr. Patrick Raaflaub, have issued statements and press releases encouraging various Swiss banks to enter the Program. (FINMA is responsible for implementing the Financial Market Supervision Act and financial market legislation, and according to their website, “As an independent supervisory authority, FINMA acts to protect the interests of creditors, investors and insured persons and to ensure the proper functioning of the financial markets.”) For example, in a recent edition of the Swiss Neue Zürcher Zeitung newspaper, Raaflaub emphasized the strong possibility that Swiss banks that chose not to enter the Program would likely face years of costly legal risks and even more coercive enforcement measures by the DOJ in the future. Further, although participation in the Program is onerous, he noted that it would provide participating Swiss banks with long-needed legal certainty.

Adding to the pressure that Swiss banks face is the fact that Raoul Weil, former UBS Chairman and chief executive officer of Global Wealth Management & Business Banking, was arrested in October while on holiday at a luxury hotel in Italy. Weil agreed to extradition to the US for trial for allegedly assisting U.S. persons in hiding $20 billion from the IRS.

The various public statements by FINMA, however, have understandably caused consternation among Swiss bankers. There is a sentiment in Switzerland that FINMA is not doing enough to protect Swiss interest and to counter the U.S. DOJ’s tactics.

Many Swiss Banks Likely to Enter the Program Following Valiant Holding AG

Despite the anti-US rhetoric, however, it appears that numerous non-Category 1 Swiss banks will follow the example set by Valiant Holding AG and will likely enter the Program today. According to recent US news reports, most of Switzerland’s approximately 300 or so smaller banks are expected to enter the Program (FINMA has not disclosed yet as to how many have done so). Therefore, Valiant Holding AG announcement, while somewhat historic, is not actually surprising.

A spokesman for Berner Kantonalbank noted that, “Participating in the program is absolutely an issue for us” and that the board would take a final vote on the matter; a spokeswoman for south Switzerland’s Corner Bank also stated that the bank was considering entering the Program. Other banks, such as Vontobel, EFG International, Banque Cantonale Vaudoise, St. Galler Kantonalbank, and Linth Bank, either have not made a decision yet, or did not issue public comments as of last week.

U.S. Taxpayers With Undisclosed Accounts In Valiant Holding AG and Other Swiss Banks Must Act Quickly

The Program presents a tremendous risk to U.S. taxpayers with undisclosed financial accounts in Valiant Holding AG and other Swiss Banks. Not only are their accounts likely to be disclosed to the IRS, but it will be done in a very short period of time.

As noted earlier, the due date for these banks is today; within a short period of time, Valiant Holding AG and other Swiss Banks will likely proceed with their disclosures to the DOJ and the IRS. In these case, U.S. taxpayers will likely face substantial civil and potential criminal penalties if they continue to hold undisclosed accounts or if their cases are not handled properly.

Therefore, U.S. taxpayers who either hold or previously held undisclosed bank accounts in Valiant Holding AG or any of the Swiss banks eligible for the Program should seek competent and experienced legal assistance as soon as possible to avoid potentially disastrous consequences.

Contact Sherayzen Law Office for Experienced, Professional Legal Help With Your Offshore Voluntary Disclosure

The experienced offshore voluntary disclosure attorney Mr. Eugene Sherayzen at Sherayzen Law Office, Ltd. can help with your all of your voluntary disclosure issues. We are a team of highly experienced team of international tax professionals who are dedicated to helping our clients. Our ethical creative balanced solutions have helped people throughout the world to properly disclose their foreign financial accounts to the IRS while avoiding the numerous voluntary disclosure pitfalls.

Contact Sherayzen Law Office NOW!

Does Location Matter? Retaining Orlando International Tax Attorney

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Retaining an international tax attorney is a very important decision. One of the frequent issues that my clients in Florida face is whether it is better to retain an international tax attorney in Orlando or in Minneapolis if you live in Orlando, Florida? If you were to search “Orlando international tax attorney”, Sherayzen Law Office, Ltd. (which is based in Minneapolis) is likely to come out on the first page together with other international tax attorneys in Orlando. The question is: should the geographical proximity of an international tax attorney play a role in the retainer decision?

The answer is “NO”! Obviously, in a case that involves a local matter, such as Florida sales tax issues, you may not have a choice but to find a local attorney. This is because local law and procedure would govern in this case, and an attorney familiar with local sales tax issues would be the best choice for handling a sales tax case. Of course, even in this case, there are exceptions because, sometimes, the unique qualities of an outside attorney are so desirable by the client that the court may accede in temporarily admitting this outside lawyer to practice just for one case.

However, if you are searching for an Orlando international tax attorney because you have undeclared offshore accounts, then the knowledge of local law and procedure are likely to be of very little value. Instead, the experience and knowledge of an attorney in his area of offshore voluntary disclosures will become the most important factors in retaining an international tax attorney.

What if you have an international tax lawyer in Orlando, do you still want to consider an attorney in Minneapolis? The answer is “yes” – for two reasons. First, international tax attorneys differ in their natural ability to identify problems and find solutions, creativity, advocacy and many other factors. Therefore, there is no reason to stay away from a better international tax attorney in Minneapolis even if there is a lawyer in Orlando. Sherayzen Law Office provides professional legal expertise in international tax law that may be more helpful to you than a local attorney in Orlando.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the area of offshore voluntary disclosures and the ability to analyze the specific subject matter of the undisclosed accounts in the broader context of the voluntary disclosure (including potential strategies that may become available due to client’s specific facts) are very important factors in retaining the attorney and should override the attorney’s particular geography.

One of the most unique features about Sherayzen Law Office is that we can handle the entire case internally – both, the legal and the accounting sides of it. Most Orlando international tax attorneys in this area of law do not do that and rely on the outside accountant to provide such additional services. The outsourcing approach has various disadvantages, including potential leak of information, lack of close coordination between both sides of the case, increased possibility of missed opportunities and absence of the unity of goal among the professionals who are preoccupied with their respective areas only. The unique business model adopted by Sherayzen Law Office is aimed to reduce and eliminate such problems.

So, the next time you search for a Orlando international tax attorney, keep these issues in mind while retaining an attorney from Minneapolis or any other city.

Contact Sherayzen Law Office for Help With International Tax Issues

If you have any international tax issues with respect to undeclared foreign financial accounts or international tax compliance in general, please contact Sherayzen Law Office for comprehensive legal and tax help.

Offshore Voluntary Disclosure of Swiss Accounts and the Program for Banks

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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) now closed.

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!

Retaining Savannah International Tax Attorney: Location Choice

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One of the important issues that US taxpayers with undisclosed foreign accounts face is whether it is better to retain an international tax attorney in Savannah or in Minneapolis if you live in Savannah, Georgia? If you were to search “Savannah international tax attorney”, Sherayzen Law Office, Ltd. (which is based in Minneapolis) is likely to come out on the first page together with other international tax attorneys in Savannah. The question is: should the geographical proximity of an attorney play a role in the retainer decision?

The answer depends on many factors. On the one hand, if you are looking for a sales tax attorney, then you may not have a choice but to find a local attorney. This is because local law and procedure would govern in this case, and an attorney familiar with local sales tax issues would be the best choice for handling a sales tax case. Of course, even in this case, there are exceptions because, sometimes, the unique qualities of an outside attorney are so desirable by the client that the court may accede in temporarily admitting this outside lawyer to practice just for one case.

One the other end of the spectrum, if you are searching for a Savannah international tax attorney because you have undeclared offshore accounts, then the knowledge of local law and procedure are likely to be of very little value. Instead, the experience and knowledge of an attorney in his area of offshore voluntary disclosures will become the most important factors in retaining an international tax attorney.

What if you have an international tax lawyer in Savannah, do you still want to consider an attorney in Minneapolis? The answer is “yes” – for two reasons. First, international tax attorneys differ in their natural ability to identify problems and find solutions, creativity, advocacy and many other factors. Therefore, there is no reason to stay away from a better international tax attorney in Minneapolis even if there is a lawyer in Savannah.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the area of offshore voluntary disclosures and the ability to analyze the specific subject matter of the undisclosed accounts in the broader context of the voluntary disclosure (including potential strategies that may become available due to client’s specific facts) are very important factors in retaining the attorney and should override the attorney’s particular geography.

What is a fairly unique feature about Sherayzen Law Office is that we can handle the entire case internally – both, the legal and the accounting sides of it. Most Savannah international tax attorneys in this area of law do not do that and rely on the outside accountant to provide such additional services. The outsourcing approach has various disadvantages, including potential leak of information, lack of close coordination between both sides of the case, increased possibility of missed opportunities and absence of the unity of goal among the professionals who are preoccupied with their respective areas only. The approach adopted by Sherayzen Law Office is aimed to reduce and eliminate such problems.

So, the next time you search for a Savannah international tax attorney, keep these issues in mind while retaining an attorney from Minneapolis or any other city.

Contact Sherayzen Law Office for Help With International Tax Issues

If you have any international tax issues with respect to undeclared foreign financial accounts or international tax compliance in general, contact Sherayzen Law Office for comprehensive legal and tax help.

Swiss Program for Banks and Undisclosed Bank Accounts in Israel

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With the DOJ Program for Swiss Banks raging in Switzerland, an obvious question arises about whether this program would be applicable in other places, most prominently, to undisclosed bank accounts in Israel. It is my opinion, as an international tax attorney, that the DOJ will attempt to apply its Swiss Program for Banks to other places, including undisclosed bank accounts in Israel.

Background Information on the Program for Swiss Banks

On August 29, 2013, the DOJ announced a new initiative – The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (Program) – which is intended to allow Swiss banks to bring themselves into compliance with DOJ requirements and avoid any US enforcement action in exchanged for detailed disclosures and, in some cases, the payment of monetary penalties.

In essence, this is a voluntary disclosure program, only for Swiss Banks. Under the Program, the Swiss banks are required to turn over a vast amount of extensive and detailed information regarding its US account holders, including list the value of accounts greater than $50,000 during three separate periods; on an account by account basis, the highest value during the period beginning August 1, 2008; the number of persons affiliated with the account and their functions; whether the account was held in a structure (a foreign corporation, foundation, etc.), et cetera.

In return, the banks that participate in the Program can use it to effectively close-out any potential U.S. compliance issues and prevent future criminal prosecution of the banks.

Benefits of the Program for the IRS

The Program offers tremendous benefits to the IRS; I will just list the chief long-term benefits. First and foremost, it is unrealistic for the IRS and the DOJ to investigate every single bank in Switzerland by itself. In essence, the Program allows the IRS to achieve this goal by using the banks themselves to investigate whether they are compliance with U.S. tax laws.

Second, the Program will provide the IRS with a tremendous amount of information regarding the schemes and techniques used by non-compliant U.S. taxpayers and their advisors (as well as the identify of these advisors). This will allow the IRS to develop the procedures to quickly identifying and investigating future potential non-compliance schemes.

Finally, the Program has the potential to identify all of the non-compliance U.S. taxpayers with undisclosed accounts in Switzerland as well as to trace whether these funds were taken out of Switzerland and moved elsewhere, especially to undisclosed bank accounts in Israel (which is already a major target for the DOJ).

As I mentioned before, there are many more other advantageous to the program; among them: establishing the precedent for future use of a similar program in another country, focusing the investigation on particular individuals and banks, and the high publicity of the program should force banks in other countries to step-up their compliance with U.S. tax laws (in case a similar approach is adopted in their countries).

The Program Is Ready to be Applied to Other Countries, including Israel

Because of its tremendous utility to the DOJ and the IRS, I believe it is highly possible that the Program will be applied in other countries, though, most likely in a modified form. The exact form of the Program is likely to be dependent on the type of the FATCA treaty that was signed between the United States and the target country as well as the target country’s government and its willingness to give in to the U.S. demands for transparency.

It is also not inconceivable that the Program will be eventually applied worldwide so that every non-compliant bank would have an opportunity to enter it. However, it is perhaps a bit premature to discuss when such a program would be enacted and what shape it would take.

The likelihood that the Program would be applied to undisclosed bank accounts in Israel is very high. First, Israel is already a focus of several DOJ investigations. Second, the IRS can already confirm (and will find more evidence of this happening after the banks submit the required information under the Program) that numerous bank accounts were closed in Switzerland by Israeli-Americans and moved elsewhere. Finally, it appears that the Israeli government would likely cooperate with the U.S. government in this area.

High Risks for U.S. Persons with Undisclosed Bank Accounts in Israel

At this point, the situation has grown intolerably dangerous for U.S. taxpayers with undisclosed bank accounts in Israel. Not only are they already potentially subject to the IRS investigation, but, if the Program is applied in Israel, there will be no safe haven for non-compliant U.S. taxpayers with undisclosed bank accounts in Israel.

In such a situation, the most prudent step for U.S. taxpayers with undisclosed bank accounts in Israel would be to retain an international tax attorney experienced in offshore voluntary disclosures in order to conduct some type of a voluntary disclosure before it is too late.

Contact Sherayzen Law Office for Professional Help with Undisclosed Bank Accounts in Israel

If you have undisclosed bank accounts in Israel, you should contact Sherayzen Law Office to conduct your offshore voluntary disclosure. Our firm consists of international tax professionals highly experienced in the offshore voluntary disclosure matters. We will thoroughly analyze your case, determine the available voluntary disclosure options for your offshore assets, and meticulously implement the chosen plan of action (including preparation of all legal documents and tax forms). Contact Sherayzen Law Office