International Tax Attorney Minnesota Minneapolis

US-Switzerland Bank Program: Migros Bank, Bank Coop, Linth Bank, Berner Kantonalbank and Vontobel Holding

/in , /by

Several weeks ago, in another article, I detailed some of the recent developments in the US-Switzerland Bank Program, officially called The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “US-Switzerland Bank Program”) between the U.S. Department of Justice (“DOJ”) and the government of Switzerland, and noted that Valiant Holdings AG had officially entered the Program. Since December 9th, the deadline imposed by Swiss Financial Market Supervisory Authority (“FINMA”) for Swiss banks to notify that authority whether they intended to enroll in the Program or not, more Swiss banks have announced that they will participate: Linth Bank, Migros Bank, Bank Coop, Berner Kantonalbank, and Vontobel Holding AG are among them.

Most Swiss banks are not listed on the stock exchange, so they not obliged to publicly disclose their intentions regarding the Program. This article will detail the further developments involving Swiss banks that have chosen to enter the US-Switzerland Bank Program, and is not intended to convey legal or tax advice. U.S. taxpayers holding Swiss accounts in any of the banks involved should pay close attention to these developments and seek the advice of professional, competent tax attorneys in these matters. The international tax expertise of Sherayzen Law Office, Ltd. can assist you in all of your tax and legal needs.

Migros Bank, Bank Coop, Linth Bank, and Berner Kantonalbank

According to various news sources, Migros Bank announced it would most likely enter the Program in Category 2. Migros Bank noted that just a small portion of its 800,000 customers are U.S. persons (and most of the U.S. persons either have dual U.S.-Switzerland citizenship or have U.S. residence permits). Because of the compliance difficulties in knowing whether such persons have paid all of their U.S. taxes (a requirement), they have decided to enter the US-Switzerland Bank Program. Migros Bank also noted that it might be approved under Category 4. The bank also claimed that it never actively sought out U.S. clients.

Bank Coop (majority-owned by Basler Kantonalbank, a bank that is already under investigation by the U.S.) also stated that it would enter the US-Switzerland Bank Program in Category 2. Bank Coop noted that accounts held by U.S. persons amounted to less than 0.3% of its total managed-accounts. Like Bank Migros, Bank Coop also claimed that it did not actively seek U.S. clients.

Linth Bank also announced it was entering the US-Switzerland Bank Program to attempt to bring a swift resolution the US-Switzerland dispute.

Like Migros Bank and Bank Coop, Berner Kantonalbank AG will enter the US-Switzerland Bank Program in Category 2. Berner Kantonalbank noted that a small portion (0.2%) of its managed accounts was held by U.S. persons. Its CEO, Hanspeter Ruefenacht, was quoted in one news report stating that the bank, “never sought to do business with American clients”.

Vontobel Holding AG

Vontobel Holding AG will also enroll in the US-Switzerland Bank Program, but under a different rational than the banks mentioned above. Vontobel Holding announced it will enter the US-Switzerland Bank Program under the DOJ’s category for Swiss banks that have not committed U.S. tax-related offenses (i.e. a Category 3 bank), and are thereby exempt from penalties under the Program. The bank stated that in 2008 it proactively instituted various measures to transfer its U.S. clients to its Swiss Wealth Advisors unit (which is registered with the Securities and Exchange Commission). American clients who decided not to move their assets to the advisors unit were made to leave the bank.

Impact on US Taxpayers

U.S. taxpayers who either hold or previously held undisclosed bank accounts at any of the Swiss banks eligible for the US-Switzerland Bank Program are advised to seek competent and experienced legal assistance. 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.

Contact Sherayzen Law Office for Help With Undisclosed Swiss Accounts

The experienced international tax law firm of Sherayzen Law Office, Ltd. can help with your all of your voluntary disclosure issues, including undisclosed accounts and other assets in Switzerland.

FBAR Penalties: Outrageous, Draconian but Real

/in , /by

If you have undisclosed foreign financial accounts that should have been reported on the Report of Foreign Bank and Financial Accounts (“FBAR”), you may be facing FBAR penalties. By far, the FBAR contains the most severe civil penalties and significant criminal penalties among all international tax forms. It is important to understand that these penalties, despite their apparently extreme nature, are real and you may be facing them.

FBAR Criminal Penalties

The two most common cases for criminal prosecution are willful failure to file an FBAR and willful filing a false FBAR, especially when combined with potential tax evasion. The criminal FBAR penalties in these cases may be up to the limit set in 31 U.S.C. § 5322. This means that, potentially, a person who willfully fails to file an FBAR or files a false FBAR may be subject to a prison term of up to 10 years, criminal penalties of up to $500,000 or both.

FBAR Civil Penalties

In addition to criminal penalties, FBAR penalties include a rich arsenal of civil penalties. The exact penalties that a person may be facing will depend on that person’s particular circumstances; these circumstances must be evaluated by an experienced international tax attorney.

In general, where the taxpayer willfully failed to file the FBAR, or destroyed or otherwise failed to maintain proper records of account, and the IRS learned about it (e.g. during an investigation), the taxpayer is likely to face the worst-case scenario with draconian penalties. The IRS may impose civil FBAR penalties of up to the greater of $100,000, or 50 percent of the value of the account at the time of the violation (in addition to the already discussed criminal FBAR penalties of up to $500,000, or 10 years of imprisonment, or both).

In certain circumstances, it is possible to mitigate the penalties, but this issue should be evaluated by an experienced international tax attorney. If mitigation is an option for you, then it may dramatically alter your calculation of willful penalties.

A less severe round of civil FBAR penalties may be imposed if a US person negligently and non-willfully failed to file the FBAR, and the IRS learned about it during an investigation. Unlike the first scenario, there are unlikely to be criminal penalties for the non-willful failure to file the FBAR. Rather, the taxpayer is likely to face non-willful FBAR penalties of up to $10,000 per violation (i.e. each unreported account in each year). However, where there is a pattern of negligence, additional civil FBAR penalties of no more than $50,000 may be imposed per each violation. Again, in limited circumstances, the taxpayer maybe eligible for the mitigation the penalties, but this issue should be evaluated by an experienced international tax attorney. While the impact of non-willful mitigation is not likely to be as dramatic as that of the willful penalties, such mitigation may still have a significant impact on the total number of penalties.

Reasonable Cause Exception and OVDP FAQ #17 (OVDP Is Now Closed)

There are two major exceptions to FBAR penalties. First, if you are able to establish reasonable cause, you may be able to escape all FBAR penalties. Again, an experienced international tax attorney should be consulted on whether you have a valid reasonable cause exception and the chances that this strategy will succeed. Second, in general, pursuant to OVDP FAQ #17 (obsolete), you may be able to avoid FBAR penalties if you have no additional U.S. tax liability as a result of  your voluntary disclosure and you already reported all of the income associated with the undisclosed foreign financial account on your tax returns. I cannot stress enough the importance of consulting an international tax attorney to  determine whether your case fits within the requirements of the OVDP Q&A #17.

IRS Offshore Voluntary Disclosure Program Closed

It is important to note that the FBAR penalty structure outlined above is not followed by the official IRS Offshore Voluntary Disclosure Program (OVDP) now closed. Rather, OVDP replaces this penalty structure with its own three-tiered penalty system with the emphasis on the aggregate balance of all accounts, rather than the number of accounts. Moreover, there is no reasonable cause exception to the OVDP (now closed) structure of penalties. However, OVDP FAQ #17 can still be applied to  the foreign financial accounts of the participating taxpayer whenever the situation warrants its application.

Given the enormous differences that exist between the IRS OVDP and the traditional statutory FBAR penalties, it is crucially important to consult an experienced international tax attorney in choosing your way to reduce your FBAR penalties.

Contact Sherayzen Law Office for Help With Your FBAR Penalties

If you have undisclosed foreign financial accounts and you are facing the FBAR penalties, contact Sherayzen Law Office as soon as possible. Our international tax firm will thoroughly analyze your case, estimate your FBAR penalties (both, under the traditional and OVDP (obsolete) penalty structures), determine the options and strategies that may be used in your Offshore Voluntary Disclosure, and implement your case plan (including the creation of any necessary legal documents and tax forms).

We are the tax experts you are looking for to handle your case!

Foreign Accounts Tax Attorney: FATCA – Nowhere to Hide

/in , /by

As a foreign accounts tax attorney, I get a lot of questions from US taxpayers with undisclosed offshore accounts with respect to what FATCA means for the purposes of global transparency. As any foreign accounts tax attorney would tell you, FATCA will and already does make a huge dent in U.S. tax non-compliance. The purpose of this article is to explain why that is the case from a perspective of a foreign accounts tax attorney.

FATCA Background

The Foreign Accounts Tax Compliance Act (FATCA) was enacted as part of the Hiring Incentives to Restore Employment Act of 2010 (“HIRE Act” or “Act”). From the perspective of a foreign accounts tax attorney, there are two major parts of FATCA that make this law so unique.

First, FATCA imposed a new set of foreign asset disclosure requirements on U.S. persons which has to be filed with a U.S. tax return: Form 8938. Second, FATCA imposes an international reporting regime of offshore accounts owned by U.S. persons. This regime is enforced through a network of FATCA implementation treaties which are negotiated between the IRS and governments of foreign jurisdictions.

Form 8938 Reporting Requirement

Form 8938 compliance is one of the most immediate concerns for a foreign accounts tax attorney. In a previous article, I detailed Form 8938 reporting requirements. For the purposes of this article, I will briefly summarize these requirements here. In general, under IRC section 6038D, disclosure is required if the aggregate value of all “specified foreign financial assets” as defined in the statute, exceeds $50,000 (compare this threshold to the FBAR requirement of $10,000). This information must be attached to the current year tax returns. This provision of FATCA is effective as of tax year 2011. Covered individuals or entities must disclose the maximum value of the asset(s) during the year, as well as other pertinent information regarding the account, stock, financial instrument, contract, interest, or related items.

Worldwide Foreign Accounts Reporting

In addition to targeting U.S. taxpayers directly with Form 8938, FATCA also establishes the framework for the worldwide reporting of US-owned foreign accounts by foreign financial institutions (the “FFI”). Through a network of FATCA-implementation treaties with other foreign governments, the FFIs will be (and, in some countries, already are) required to report foreign financial accounts owed by U.S. persons and impose a withholding tax on the earnings of these accounts.

In essence, as a Foreign Accounts Tax Attorney would assert, FATCA turns the FFIs into the IRS withholding and reporting agents on an unprecedented, systematic scale of the entire globe (or, at least, the participating countries which are likely to include some of the largest world economies, particularly European countries and Japan).

Cumulative Impact of FATCA Provisions on the Non-Compliant US Taxpayers

In the long term, as a Foreign Accounts Tax Attorney, I believe that FATCA has the ability to create the environment of global tax compliance with respect to undisclosed foreign accounts – probably, not 100%, but close. Of course, a lot will depend on the ability of the US government to promote FATCA implementation treaties around the globe. As a Foreign Accounts Tax Attorney, I anticipate great unwillingness of countries like China and Russia to fully participate in the Program. Nevertheless, at this point, it appears that Western Europe, Canada, Australia and Japan are likely join the global web of FATCA enforcement. I predict that special pressure may be applied to certain Central American countries, Singapore and the Caribbean countries to enroll them into FATCA compliance as soon as possible.

For non-compliant US taxpayers, this means that it is time to consider the impact of global FATCA enforcement as well as learn from the lessons of the Program for Swiss Banks. This means that the voluntary disclosure options should be considered as soon as possible to avoid dire consequences later. This type of analysis should be undertaken by an experienced Foreign Accounts Tax Attorney.

Contact Sherayzen Law Office for Help with the Voluntary Disclosure of the Offshore Accounts

If you have undisclosed offshore accounts, contact Sherayzen Law Office for help with your voluntary disclosure as soon as possible. Our experienced Foreign Accounts Tax law firm will thoroughly analyze your case, identify your voluntary disclosure options, prepare all of the necessary legal documents and tax forms, file your voluntary disclosure package and rigorously defend your case during the IRS negotiations.

OVDP Lawyers Little Rock: Raiffeisen and Postfinance Join Program for Swiss Banks

/in , /by

On December 13, 2013, two Swiss Banks, Raiffeisen and Postfinance, joined the growing number of Swiss Banks who announced their participation in the 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 – an event long anticipated by many OVDP lawyers, including the OVDP lawyers Little Rock. These news further confirm the precarious situation of the U.S. taxpayers with undisclosed foreign accounts in Switzerland.

OVDP Lawyers Little Rock: The Program

The DOJ, in cooperation with the Swiss government, instituted the Program at the end of August of 2013. I already described the Program in detail in another 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.

OVDP Lawyers Little Rock: Why the Joining of Raiffeisen and PostFinance Significant

Size matters, and this why the cooperation of Raiffeisen and PostFinance is important. Raiffeisen is the third largest bank in Switzerlan. Postfinance, is the banking arm of the Swiss state-owned postal services company and the fifth-biggest retail financial institution in Switzerland.

OVDP Lawyers Little Rock: Growing Number of Swiss Banks Join the Program

A total of seven banks (among them: St. Galler Kantonalbank, Valiant Holding, Berner Kantonalbank and Vontobel Holding AG) have now come forward to say that they are participating in the Program. Most of them will participate as a Category 2 bank while the rest intend to participate as a Category 3 bank. PostFinance will be participating in the Program as a Category 2 bank, while Raiffeisen said that it is likely that it will register as a Category 3 bank (even though, the bank did not rule the possibility that some of the its U.S. clients may have been non-compliant with U.S. tax laws). It seems that Vontobel is the only other bank that adopted this position.

These seven banks, however, constitute but a tiny part of the total number of banks who are likely to participate in the Program. While the total number of banks varies, it is expected that about 100 banks are expected to enter the Program by December 31, 2013, deadline.

The DOJ strongly encourages Swiss Banks to participate in the Program and promises tough action with respect to non-participating Banks. “Banks that facilitated U.S. tax evasion but do not come forward by the December 31 deadline bear significant risks that information provided by others may cause the bank to be targeted and prosecuted,” said Assistant Attorney General Kathryn Keneally.

Side Effect on Category 1 Banks

The Program has had a peculiar side effect on the Category 1 banks who are not eligible to participate in the Program (e.g. UBS, Credit Suisse, Julius Baer, et cetera). The cases of these banks have been frozen by the DOJ pending the resolution of the Program in the wider Swiss banking sector.

As some OVDP Lawyers Little Rock may predict, the number of banks that participate in the Program will likely affect the DOJ’s attitude toward the other banks.

Direct Effect of the Program: Non-Compliant US Taxpayers Should Consider Voluntary Disclosure NOW

The effect of the Program on US Taxpayers with undisclosed Swiss accounts is very direct and severe. They are quickly running out of options. If they do not consider their voluntary disclosure options at this point, they may lose the ability to participate in the IRS Offshore Voluntary Disclosure Program (“OVDP”).

Contact Sherayzen Law Office for Help with the Voluntary Disclosure of Your Swiss Financial Accounts

Given the time limitations, it is extremely important that you contact Sherayzen Law Office as soon as possible. Owner Eugene Sherayzen, an experienced offshore voluntary disclosure attorney will thoroughly analyze your case, identify the available voluntary disclosure options, prepare your voluntary disclosure package and negotiate the Closing Agreement with the IRS (for the OVDP cases).

Does Location Matter? Retaining Orlando International Tax Attorney

/in , /by

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.