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Banks Face Smaller Fines for Cooperating with Authorities

Offshore Account Update

Posted on August 26, 2014 |

U.S. taxpayers with offshore accounts are finding themselves facing increased pressure to report these investments. The risks of non-reporting become bigger every day, as the Internal Revenue Service and the Department of Justice have joined together to crack down on tax evaders. 

One of the steps that U.S. authorities are taking is going after Swiss banks. These banks can face prosecution and huge fines and penalties if they facilitate tax evasion by keeping U.S. accounts secret. According to Swiss Info, however, the banks are able to limit the fines they face and reduce their potential penalties if they provide more information about accounts to the U.S. government. 

If a Swiss bank or other foreign bank turns over information to the IRS that allows them to identify your account, you could potentially face criminal prosecution as well as significant financial penalties that may be greater than the value of the offshore accounts. You need to speak with a Boston IRS amnesty attorney about participating in voluntary disclosure programs like OVDP before your bank is targeted and the IRS obtains your information. 

Banks Cooperating with U.S. Authorities to Reduce Their Fines

A total of 106 Swiss banks are part of a program in which the banks have agreed to cooperate with tax authorities in the United States. The banks who are participating in the program have been grouped into different categories based on their culpability in helping U.S. citizens evade tax obligations.  

Category 2 banks have some exposure to U.S. clients who are evading taxes. These banks have aided tax evaders who live in the United States, but the banks will be able to avoid criminal prosecution provided they cooperate with authorities. There are approximately 80 institutions considered Category 2 banks.  

These banks could face fines between 20 and 50 percent lower than initially expected if they agree to be more cooperative and provide more information to U.S. authorities. The banks have already sent the Department of Justice and the IRS information about the number of clients served in recent months and have clarified what the penalties will be for putting funds in offshore accounts.    

The banks are not required to give individual names of clients to U.S. authorities. However, they do have to give the U.S. prosecutors information that they require when setting up judicial requests to target people within the country who may be evading their taxes.  

The banks will find out the individual fines that must be paid in September.  Banks that were considered Category 1 have already been fined. Credit Suisse, for example, was a Category 1 bank because it had previously been under investigation and it pled guilty to criminal charges. It was fined more than $2.5 billion. 

With the potential for such huge fines and penalties, banks may be eager to cooperate to reduce their own potential exposure. The result is that U.S. taxpayers with offshore accounts could pay the price when the IRS is able to obtain information about their foreign investments.  

To protect yourself, you need to participate in voluntary disclosure programs before the IRS begins investigating you. An experienced Boston IRS amnesty attorney at Thorn Law Group can assist you in determining if OVDP or other voluntary disclosure programs are right for you.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989


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