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Banks Seek Amnesty by Turning Over Accountholder Information

Offshore Account Update

Posted on October 9, 2015 |

The Department of Justice allows banks who helped facilitate tax evasion to resolve potential criminal liability through participation in the Swiss Bank Program.  Four banks have now signed agreements with the DOJ. 

Chief Richard Weber for the IRS-Criminal Investigation (CI) indicates that the fact these four banks have entered into agreements signals “a change in terrain for offshore banking.”  He warns: “No longer is it safe to hide money offshore and expect that it will not be discovered.  IRS CI Special Agents will continue to follow the money to find those who circumvent the offshore disclosure laws and hold them accountable.”

Accountholders with offshore funds need to understand their options for participation in an Offshore Voluntary Disclosure Program (OVDP), which is an IRS amnesty program that makes it possible to resolve undeclared offshore accounts. There is a penalty for participation in OVDP, which is 50 percent after an increase in August of 2014. 

Still, participation in OVDP may be preferable to facing charges for tax evasion or consequences for non-reporting of offshore accounts if the IRS comes after you before you have come forward on your own.  A Boston tax attorney can help you to determine if you are at risk and if you should take steps to try to minimize your potential financial loss now.

Banks Turn Over Accountholder Information to DOJ

The Swiss Bank Program allows banks to pay penalties and enter into non-prosecution deals. However, the banks must do more than just pay a fine. They have to agree to close the accounts of U.S. accountholders who do not come into compliance with reporting requirements; and must cooperate in treaty requests for information about accountholders.

They also have to make full disclosure of cross-border activities and, most troubling for accountholders, they have to provide detailed information on an account-by-account basis for any accounts that U.S.-affiliated taxpayers have either a direct or an indirect interest in.

Banks, in other words, have to turn on their customers in order to reduce penalties they face themselves.  The four banks that have now signed agreements and taken this deal include Société Générale Private Banking, MediBank AG, LBBW-Schweiz and Scobag Privatbank.  MediBank AG had only 14 accounts and Scobag Privatbank had only 13 accounts, with balances just around $8.6 million and $6.9 million, respectively.

There is virtually no financial institution offshore that is immune from being a target of investigations by the DOJ, so even banks with just a few U.S. accounts may decide to provide information on accountholders to authorities. This means almost no offshore accountholders are safe from having their information given to the IRS. 

Once the IRS is investigating you, it is too late to voluntarily disclose offshore accounts. Accordingly, the penalties and consequences of non-reporting could be much more severe.  Contact tax attorney Kevin Thorn as soon as possible to find out what this could mean for you and what your options are for trying to hold on to as much of your money as possible if you have offshore accounts you have not declared.

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

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