Offshore Voluntary Disclosure Program

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!

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

France FATCA Agreement Signed

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On November 14, 2013, the U.S. Department of the Treasury announced that the United States has signed an intergovernmental agreement (IGA) with France to implement the Foreign Account Tax Compliance Act (FATCA). Enacted in 2010, France FATCA IGA aims to curtail offshore tax evasion by facilitating the exchange of tax information. With France FATCA IGA, 10 FATCA IGAs have been signed to date (Denmark, France, Germany, Ireland, Mexico, Norway, Spain, United Kingdom, Japan and Switzerland).

“France has been an enthusiastic supporter of our effort to promote global tax transparency and critical to drafting a model of FATCA implementation,” said Deputy Assistant Secretary for International Tax Affairs Robert B. Stack. “This agreement demonstrates the growing global momentum behind FATCA and strong support from the world’s most important economies.”

France was among the first countries to champion the underlying goals of FATCA and its intergovernmental approach in 2012. France FATCA IGA was signed today by U.S. Ambassador to France Charles H. Rivkin and French Finance Minister Pierre Moscovici.

“The signing of this agreement marks an important step forward in the collaboration between the United States and France to combat tax evasion,” said Ambassador Rivkin.

FATCA seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on U.S. account holders. FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country.

The IGA between the United States and France is the Model 1A version, meaning that FFIs in France will be required to report tax information about U.S. account holders directly to the French government, which will in turn relay that information to the IRS. The IRS will reciprocate with similar information about French account holders.

In addition to the 10 FATCA IGAs that have been signed to date, Treasury has also reached 16 agreements in substance and is engaged in related conversations with many more jurisdictions.

Contact Sherayzen Law Office For Help With Undisclosed Accounts in France

If you have undisclosed financial accounts in France, contact Sherayzen Law Office for professional IRS representation. Our team consists of dedicated, experienced tax professionals who will thoroughly analyze your case, advise on the available voluntary disclosure options, prepare all necessary tax forms and legal documents, and professionally represent your interests through the IRS voluntary disclosure process.

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.

Offshore Voluntary Disclosure Attorney: Introduction to Program for Swiss Banks

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Since the early 2000s, the IRS has engaged in a multi-layered effort to enforce U.S. tax laws overseas, in particular (at least from the perspective of an offshore voluntary disclosure attorney) curb tax evasion in Switzerland with the emphasis on undisclosed Swiss financial accounts (mainly FBAR compliance). In 2008, the U.S. Department of Justice (DOJ) scored a major victory in the now-famous UBS case.

Since that case, DOJ has pursued a large number of criminal investigations against the U.S. accountholders, Swiss tax and financial advisors and, actually, Swiss banks. There has also been a tremendous surge in IRS civil audits and John Doe summons. Even the Whistleblower Office became engaged in the international tax compliance efforts. A number of new laws and treaties, stemming from FATCA, have been utilized by the U.S. government in its worldwide efforts to increase U.S. tax compliance internationally.

As the DOJ increased its pressure on the U.S. taxpayers who have undisclosed foreign accounts, the IRS created a number of voluntary disclosure programs, 2012 Offshore Voluntary Disclosure Program (OVDP) being the latest example. As of September of 2013, it is estimated that about 40,000 U.S. taxpayers have voluntary participated in this program OVDP is now closed.

The Program – Voluntary Disclosure Program for Swiss Banks

On August 29, 2013, the DOJ announced a new, unprecedented 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. Unlike the OVDP, however, this is “OVDP” for foreign banks in a foreign country! This is a truly unique reach that the DOJ and IRS have achieved in a country which has been celebrated for centuries for its bank secrecy laws.

Outlines of Required Disclosure

Under the Program, the Swiss banks are required to turn over a vast amount of extensive and detailed information regarding its account holders, including providing the following information: description of how the banks structured, operated and supervised their cross-border activities; list of names and functions of all individuals who participated in any of this activity; description of how a bank marketed its services to U.S. persons and serviced their accounts; 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.); whether it held U.S. securities; the name and role of any outside advisor affiliated with the account; information about transfers of funds into or out of the account; and other detailed information (note: these are some of the disclosure requirements, but there are many more – contact offshore voluntary disclosure attorney Eugene Sherayzen at Sherayzen Law Office for more information).

In essence, with this information, the IRS and DOJ can freely pursue civil and criminal investigations of U.S. persons who have had undisclosed bank accounts since 2008 (and possibly earlier).

Consequences for Swiss Banks

The banks who participate in the Program can use the it to effectively close-out any potential U.S. compliance issues and prevent future criminal prosecution of the banks. The hope is that it will enable Swiss banks to put this issue behind them and enable them to develop a more attractive investment environment in the future.

Consequences for U.S. Accountholders

As any offshore voluntary disclosure attorney will tell you, the consequences for the U.S. accountholders with undisclosed accounts in Switzerland are infinitely more dire. Armed with such detailed information, the IRS should have no problems auditing and, ultimately, prosecuting U.S. taxpayers who are not compliant with U.S. tax laws.

Furthermore, those individuals who have engaged in quiet disclosure at any point since 2008 are under severe risk of exposure and potential prosecution. For example, if a U.S. taxpayer had an undisclosed account since 2004 and engaged in quiet disclosure in 2012, he may now potentially face an IRS audit for all years going back to 2007 (and potentially further).

Additionally, there is a great uncertainly for U.S. taxpayers with Swiss accounts who wish to enter the OVDP, because their accounts may have already been disclosed independently by Swiss banks to the IRS. In this case, the OVDP participation may be precluded.

Contact Sherayzen Law Office for Legal Help with Undisclosed Swiss Accounts

If you have undisclosed Swiss accounts at any point since 2005, contact Sherayzen Law Office for professional help. Our international tax law firm is highly experienced in the voluntary disclosures of foreign financial accounts and other offshore assets. 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).