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DOJ Program for Swiss Banks: Important June 2014 Developments

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In a series of articles, we covered the U.S. Department of Justice’s new voluntary disclosure program for Swiss banks and the four filing categories involved. In June of 2014, a number of important developments regarding the DOJ Program for Swiss Banks occurred.

In this article, we will explain some of these new developments. This article is intended to provide interested individuals with general information about these developments, and does not convey tax or legal advice. If you have an offshore account, you should seek the advice of a tax attorney as significant penalties are involved. The experienced tax law firm of Sherayzen Law Office, Ltd. can assist you in your voluntary offshore disclosure and other tax and legal matters.

DOJ Program for Swiss Banks: DOJ Extends Deadline for Category 2 Swiss Banks

On June 5, 2014, the U.S. Department of Justice announced that it would extend the original June 30 deadline for category 2 Swiss banks for one month until July 31st. According to various new sources, the deadline was extended because of the difficulties Swiss banks were having in attempting to verify whether the accounts of U.S. taxpayers were undeclared or disclosed in a timely fashion to the IRS.

More than 100 Swiss banks have already applied under the DOJ program for Swiss Banks. For U.S. taxpayers with undisclosed bank accounts in Switzerland, this is highly welcome news.

Goldman Sachs and Morgan Stanley Swiss Units Apply to Enter the DOJ Program for Swiss Banks; Citigroup and J.P. Morgan Maybe Next

Recently, the Swiss units of Goldman Sachs Group Inc. and Morgan Stanley announced that they will enter the DOJ Program for Swiss Banks. According to various sources, Goldman’s Swiss private bank managed nearly $12 billion in assets as of year-end 2013. Morgan Stanley’s Swiss private bank managed about $50.7 billion- most of this amount however, was located in its branches in Hong Kong and Singapore.

Citigroup Inc. and J.P. Morgan also have Swiss operations; according to several news sources, Citibank Switzerland AG did not yet enter category 2, but this is definitely a possibility. Same is true of J.P. Morgan’s private Swiss bank.

DOJ Program for Swiss Banks: Credit Suisse Pleads Guilty

Recently, Credit Suisse pleaded guilty to conspiracy and agreed to pay $2.6 billion in a settlement with the DOJ. Please, read this article for more information.

DOJ Likely to Increase Focus on Undisclosed Accounts of US Taxpayers in the Cayman Islands, Singapore and Cook Islands, Among Others

The DOJ and the IRS have provided various indications that they intend to expand the scope of the U.S. pursuit of undisclosed foreign accounts to other major tax havens, such as Cayman Islands, Singapore, Cook Islands, Panama, et cetera.

For example, in an interview concerning the Credit Suisse case, Kathryn Keneally, former head of the Justice Department’s tax division, signaled the DOJ’s intentions to increase their focus on other tax-havens. After noting that the U.S. has traced (often, using the information collected during the DOJ Program for Swiss Banks) the money transfers to accounts held by U.S. persons in banks located in the Cayman Islands and other Caribbean countries, India, Israel, Luxembourg, and Lichtenstein, she highlighted the following: “It’s fair to say we know where the tax-haven countries are. You’ve got Singapore, you’ve got the Cook Islands… .”

The DOJ Program for Swiss Banks has provided an enormous amount of information regarding not only the Swiss bank accounts, but transfers to other countries. As Dena Iverson, a DOJ spokeswoman noted in a recent news article, “Through the program [the DOJ Program for Swiss Banks], as well as through ongoing investigations and other law enforcement tools, we are confident that we will obtain information that will lead us to account holders who have thought for too long that they can keep hiding.”

U.S. persons who hold accounts in Singapore, Cook Islands, Cayman Islands, Israel, India, Lebanon and other “target” countries should immediately seek advice in disclosing their offshore accounts. The worldwide FATCA compliance, combined with the potential of having another equivalent of the DOJ Program for Swiss Banks in any other of these countries, makes it simply reckless to wait for the DOJ and the IRS investigations.

2014 OVDP

On June 18, 2014, the IRS announced a major update to its 2012 Offshore Voluntary Disclosure Program (OVDP), which includes new opportunities and penalties. See this article for further information.

The 2014 OVDP is directly relevant to U.S. taxpayers with undisclosed accounts in Swiss Banks which are currently working within the DOJ Program for Swiss Banks, because the banks’ disclosure of the unreported accounts may substantially reduce the available voluntary disclosure options for the U.S. taxpayers who own these accounts. Moreover, the US taxpayers with undisclosed accounts in the entities that are categorized under the DOJ Program for Swiss Banks as Category 1 banks may be subject to heightened penalties under the new 2014 OVDP rules.

This is why it is very important to coordinate your voluntary disclosure with the DOJ Program for Swiss Banks.

Contact Sherayzen Law Office for Professional Help with Your Offshore Voluntary Disclosure

If you have undisclosed foreign accounts in Switzerland, contact Sherayzen Law Office for experienced legal help. Whether or not you received a letter from a Swiss Bank pursuant to the DOJ Program for Swiss Banks, time is likely to be of critical importance for you.

Contact Us today to Schedule Your Confidential Consultation – We Can Help!

New 2014 OVDP Update: Introduction

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On June 18, 2014, the IRS made a major upgrade to its existing Offshore Voluntary Disclosure Program (“OVDP”).  The new OVDP will now be called 2014 OVDP.  While the changes to the OVDP rules are significant, the new rules regarding the Streamlined Procedure are maybe even more important.

Here is a summary of the 2014 changes to the 2012 OVDP:

2014 OVDP Update: New Miscellaneous 50% Penalty

The IRS added a new FAQ 7.2 which imposes a 50% offshore penalty on taxpayers who participate in the OVDP if: either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation.

I believe that this new penalty is a direct consequence of the successful IRS and DOJ efforts to enforce FATCA overseas, particularly the Swiss Program for Banks.  Read this article for more information.

2014 OVDP Update: Elimination of the Reduced Penalty Structure Under FAQ 52 and 53

The reduced 12.5% and 5% penalty structure under former FAQs 52 and 53 has been eliminated due to the expansion of the Streamlined Filing Compliance Procedures. Rather, the new Streamline Offshore Procedure will take over. Special procedures apply to the taxpayer who already entered the OVDP program. I will provide more details in a later article.

2014 OVDP Update: Elimination of FAQ 17 and 18; Procedure is Still Available

This change is just the clarification of the already existing rules. While technically both rules are eliminated, the taxpayer can still use both rules.  Read this article with respect to the Delinquent FBAR Submission Procedures (replacing FAQ 17). I will provide the FAQ 18 details in a later article.

2014 OVDP Update: New Streamline Procedure Rules – US Residents are Included

It finally happened – taxpayers residing in the United States now have the option to enter the streamline procedures which were first announced on September 1, 2012. Other major changes include the elimination of the $1,500 tax threshold and elimination of the risk assessment process. I will provide more details in a later article.

2014 OVDP Update: Updated Streamlined Foreign Offshore Procedures

The IRS greatly expanded the eligibility requirements for the U.S. taxpayers who reside overseas.  Read this article on the Streamlined Foreign Offshore Procedures.

2014 OVDP Update: Major Changes to FAQ 31-41

These are the important changes that the 2014 OVDP Update made to the calculation of the asset base to which the offshore penalty will apply.

2014 OVDP Update: New Pre-Clearance Procedural Change under FAQ 23

Now, the IRS wants to know more information about you before granting the pre-clearance to apply for the OVDP. The 2014 OVDP Update greatly expands the information required to be submitted under FAQ 23. I will provide more details in a later article.

2014 OVDP Update: Offshore Penalty Must Be Paid With Submission of the OVDP Package

This is a major 2014 OVDP Update to FAQ 7. Now the Offshore Penalty must be paid with the submission of the OVDP Package. Again, I will provide more details in a later article.

Other 2014 OVDP Updates: Procedural Changes

The rest of the 2014 OVDP Update changes are more procedural in nature, but may have real substantive impact. Among them, the changes in the FAQ 25 (requiring the submission of account statements irrespective of the size of the disclosure), new OVDP Letter, new OVDP Letter Attachment, and other technical changes. Once again, I will provide more details in a later article.

Contact Sherayzen Law Office for a Professional Advice Regarding Your Offshore Voluntary Options

The new 2014 OVDP Update presents new opportunities mixed with new traps. It is important to make sure that you get expert advice regarding your Offshore Voluntary Disclosure. Contact the experienced tax law firm of Sherayzen Law Office. We have helped clients throughout the world and we can help you.

Contact Us to Schedule Your Confidential Consultation!