FATCA Switzerland: Swiss Senate Approves FATCA

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FATCA Switzerland: FATCA Legislation Approved

On September 23, 2013, Swiss Senate voted to approve the implementation of Foreign Account Tax Compliance Act (FATCA). This event came barely a few weeks after the Swiss House of Representative approved the same legislation.

At this point, Swiss Banks have a clear way to cooperate with the IRS and US Department of Justice in turning over the required information regarding U.S. accountholders in Switzerland.

At the same time, on August 29, 2013, the DOJ announced the creation of the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”) – a voluntary disclosure program for Swiss Banks.

FATCA Switzerland: What is Driving Swiss Acceptance?

While there may have been strong reasons to oppose the bill, it appears that the driving force behind the acceptance of FATCA by Switzerland has been the fear that Swiss banks would be effectively excluded from the US capital markets if they did not accept FATCA. Most representatives acknowledged that FATCA is a reality, whether Switzerland likes it or not.

FATCA Switzerland: Model 2 Treaty

Unlike most European countries currently engaged in FATCA negotiations, Switzerland opted for the “model two” FATCA implementation treaty. Swiss banks will have to report accounts belonging to US taxpayers with more than $50,000, but client data will only be exchanged once the US authorities have requested administrative assistance (there are exceptions, especially under the Program).

Most European Union countries have accepted another type of FATCA implementation treaty, in which information is exchanged automatically, the so-called “model one”.

FATCA Switzerland: Impact on U.S. Taxpayers With Undeclared Financial Accounts

The FATCA bill will be implemented in Switzerland in stages starting in July 2014. In the meantime, however, the Program will be the main event with respect to FATCA compliance.

The impact on the U.S. taxpayers with undeclared financial accounts is likely to be a dramatic one, though not unexpected. We can already observe a rise in the OVDP (the IRS Offshore Voluntary Disclosure Program now closed) participation and the expectation is that 2014 will reflect a major participation of US non-compliant taxpayers in the program.

From the IRS perspective, starting the second half of 2014 and especially 2015, we also expect to see a large increase in criminal prosecutions and investigations of U.S. persons with undeclared financial accounts. This is because, through OVDP and the Program, the IRS will accumulate a massive amount of information allowing it to target non-compliant taxpayers with terrifying precision.

Contact Sherayzen Law Office For Help With Undeclared Foreign Accounts

If you are a U.S. taxpayer with undeclared foreign accounts, you should contact Sherayzen Law Office as soon as possible. Our firm consists of a team of highly intelligent and experienced tax professionals dedicated to helping U.S. taxpayers to bring themselves into compliance with U.S. tax law in a reasonable ethical manner. Not only will we be able to advise you on your voluntary disclosure options, but we will also be able to prepare all of the required tax forms and legal documents for you under the protection of the Attorney-Client Privilege.

Offshore Voluntary Disclosure Lawyers: Eligibility for Program for Swiss Banks

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As offshore voluntary disclosure lawyers know very well, Switzerland continues to be the center of the unprecedented IRS and US Department of Justice enforcement of U.S. international tax laws, including FATCA. In a recent article, I described a new initiative, The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”), which is essentially a voluntary disclosure program for Swiss banks. In the Program, eligible banks can avoid US criminal prosecution in exchange for detailed disclosure of the accounts owned by U.S. taxpayers (as well as, in some cases, payment of monetary penalties).

The issue is: what banks in Switzerland are eligible to participate in the program? The issue is not only relevant to the banks themselves, but also for U.S. accountholders in Switzerland how have and have had foreign financial accounts in Switzerland during any time between January 1, 2008 and the present time. The chief reason is because these are accounts are most likely to be disclosed as early as the first quarter of 2014, thereby very likely preventing these U.S. taxpayers from entering into the OVDP program since closed.

Swiss Banks Under Grand Jury Investigation Are Not Eligible

Swiss banks which are classified by the DOJ as Category 1 banks are not eligible to participate in the Program. Currently, there are at least fifteen banks which are included in this category. Most likely (thought not officially named by the DOJ) these banks are: Julius Baer Group AG, Credit Suisse, Rahn & Bodmer, Zuercher Kantonalbank, Basler Kantonalbank, Bank Hapoalim, Mizrahi-Tefahot Bank, Bank Leumi and others.

Types of Institutions Open to the Program

Many Offshore Voluntary Disclosure Lawyers pay close attention to the fact that the Program applies only custodial and depository financial institutions.

So, Swiss insurance companies, various fiduciaries, and many other investment companies cannot take advantage of the Program). It is not open to individuals; hence, asset managers, financial advisors and lawyers cannot participate in the program.

Impact on Offshore Voluntary Disclosure Program in the United States

If you are the taxpayer with an undisclosed financial account in a Swiss Bank that is eligible to participate in the Program, you need to consider your voluntary disclosure options immediately. As many offshore voluntary disclosure lawyers will tell you, if the IRS receives the information from a Swiss bank participating in the Program before you disclosure your account and initiates an investigation against you, it is very likely that you will not be accepted into the Offshore Voluntary Disclosure Program.

I expect that the letters sent out by the Swiss banks which intend to participate in the Program to their current and former U.S. customers will have a dramatic impact on the rising number of participants in the OVDP or OVDI. In fact, this trend can already be observed from the fact over 40,000 people have already participated in the IRS offshore voluntary disclosure programs.

Contact Sherayzen Law Office for Help with Your Undisclosed Swiss Bank Accounts

If you currently have undisclosed foreign accounts in Switzerland or you had such accounts at any point prior and after January 1, 2008, and closed these accounts, contact Sherayzen Law Office for help with your offshore voluntary disclosure options. Our experienced offshore voluntary disclosure tax firm will thoroughly review your case, estimate your existing tax and FBAR liability in the United States, identify the available voluntary disclosure options, prepare your voluntary disclosure package (including all legal documents and tax forms) and rigorously defend your interests during your negotiations with the IRS.

San Francisco International Tax Lawyer: Influence of Location

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While looking for a San Francisco international tax lawyer, one of the important issues that clients face is whether it is better to retain an international tax attorney in San Francisco or in Minneapolis if you live in San Francisco? If you were to search “San Francisco international tax lawyer”, 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 San Francisco. 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 extreme, if you are looking for a sales tax lawyer, then you may not have a choice but to find a local lawyer. This is because local law and procedure would govern in this case, and an lawyer 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 lawyer 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 San Francisco international tax lawyer 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 a lawyer in his area of practice (i.e. international tax law) will become the overriding factors in retaining a San Francisco international tax lawyer.

What if you have an international tax lawyer in San Francisco, do you still want to consider an attorney in Minneapolis? The answer is “yes” – for two reasons. First, international tax lawyers 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 lawyer in Minneapolis even if there is a lawyer in San Francisco.

Second, in addition to differences in personal qualities, the experience of the international tax lawyer in the international tax sub-area that you need and the ability to analyze the specific subject matter in the broader context are very important factors in retaining the lawyer and should override the lawyer’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 San Francisco international tax lawyers 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 San Francisco international tax lawyer, keep these issues in mind while retaining a lawyer 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 assets, international tax compliance or international tax planning, contact Eugene Sherayzen, an experienced tax attorney of Sherayzen Law Office for comprehensive legal and tax help.

Philadelphia International Tax Attorney: Retainer by Location

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Retaining the right Philadelphia international tax attorney is not easy. One of the important issues that taxpayers face is whether it is better to retain an international tax attorney in Philadelphia or in Minneapolis if you live in Philadelphia? If you were to search “Philadelphia 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 Philadelphia. 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 extreme, 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 Philadelphia 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 practice (i.e. international tax law) will become the overriding factors in retaining an international tax attorney.

What if you have an international tax attorney in Philadelphia, 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 an attorney in Philadelphia.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the international tax sub-area that you need and the ability to analyze the specific subject matter in the broader context 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 Philadelphia 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 Philadelphia 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 assets, international tax compliance or international tax planning, contact the experienced international tax team of Sherayzen Law Office for comprehensive legal and tax help.

Retirement Savings Contributions Credit 2013

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You may be eligible for a tax credit if you make eligible contributions (other than rollover contributions) to an employer-sponsored retirement plan or to an individual retirement arrangement.

Eligible Plans

The eligible plans for the retirement savings contribution credit include: traditional and Roth IRAs, 401(k), 403(b), governmental 457, SEP, SIMPLE, 501(c)(18)(D) and contributions to a qualified retirement plan as defined in section 4974(c) (including federal Thrift Savings Plan).

Additional Requirements and Limitations

Other important eligibility requirements and limitations include:

1. Income Limitations

You cannot exceed the following income limits in order to be able to take the Retirement Savings Contributions Credit (these are 2013 numbers):

• Single, married filing separately, or qualifying widow(er), with income up to $29,500

• Head of Household with income up to $44,250

• Married Filing Jointly, with income up to $59,000

2. Age Limitation

To be eligible for the Retirement Savings Contributions Credit you must have been born before January 2, 1996.

3. Full-Time Students Not Eligible

You cannot have been a full-time student during the calendar year if you wish to claim the Retirement Savings Contributions Credit (there are some specific definitions regarding the “student” status).

4. Cannot Be a Dependent on Another Person’s Tax Return

If you were claimed as a dependent on someone else’s 2013 tax return, you cannot take the Retirement Savings Contributions Credit.

5. Distributions are Deducted From Contributions

When figuring the Retirement Savings Contributions Credit, you generally must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date – including extensions – for filing the return for the credit year.

Credit amount

If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

Also note that the Retirement Savings Contributions Credit is a benefit in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA.