OVDP Urged by Swiss BanksOffshore Account Update
Posted on August 12, 2016 | Share
U.S. citizens who have $10,000 or more total across all foreign accounts at any point during the year must file annual Reports of Foreign Bank and Financial Accounts (FBARs). Offshore accounts and money earned from those offshore accounts must be declared to the IRS, or serious consequences can arise.
There are strict rules on reporting offshore accounts and income, because moving money offshore has long been a popular way to try to evade taxes. Switzerland was one of the most popular places to move money, because of its strict banking privacy laws and the long tradition that Swiss financial institutions had for respecting client privacy.
This tradition, however, is no more. Swiss banks are not only not respecting the privacy of their clients, but they are even sending clients letters urging them to notify the IRS of their past failures to comply with tax rules.
If your Swiss bank suggests anything to you about coming forward and telling the IRS about undeclared offshore funds, you need to pause and get the proper legal help from a Boston tax law firm as quickly as possible. The bank is not looking out for you- it is looking out for itself. You could be at substantial risk of financial penalties if you don't act to protect your interests.
Swiss Banks Urging OVDP Participation
Swiss banks may be sending letters to clients about reporting their past tax problems because the banks want to enter into the best possible non-prosecution agreement with the Department of Justice. As part of a program called the Swiss Bank Program, it is possible for financial institutions to avoid criminal penalties if they come forward, voluntarily report their role in tax evasion, and pay a fine. A condition of participation in the Swiss Bank Program, however, is that banks give details on accountholders and account transactions to the IRS.
Banks want to get the DOJ to give them a break, so they are urging their accountholders to alert the IRS to past failures to report income and assets. In particular, Swiss banks are suggesting to clients that they should participate in the Offshore Voluntary Disclosure Program OVDP) that has been created by the IRS.
OVDP is similar to the Swiss Bank Program in that it works to encourage voluntary reporting of offshore funds by promising to limit penalties and take criminal charges off the table. The fines, however, can be astronomically high for those who take advantage of the program.
Not only do you have to pay a penalty equal to a percentage of the highest account balance under the Bank Secrecy Act, but you also have to pay taxes on income earned in the offshore account, a 20 percent accuracy fee, and interest on money which should have been paid to the IRS over the prior eight years but which wasn't paid because the income wasn't reported.
OVDP's penalties can be damaging, and Swiss banks don't make that clear in urging OVDP participation. Before you decide OVDP is right for you, you should talk with attorney Kevin Thorn to explore all of your options.
For a consultation, contact Kevin E. Thorn, Managing Partner, at email@example.com or (617) 692-2989