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Tax Amnesty Programs - More Accountholders Are at Risk

Offshore Account Update

Posted on January 15, 2016 |

The Swiss Bank Program has resulted in offshore banks paying millions of dollars in penalties.  Just recently, Courthouse News Service  indicated that there are three additional banks now participating in the Swiss Bank Program.

Collectively, the banks will pay $130 million in penalties because the financial institutions helped account holders affiliated with the United States avoid tax obligations.  In exchange for paying penalties and for offering up detailed information about the people who owned accounts (and other financial institutions that transferred money to them), the three banks will no longer face the threat of criminal prosecution.

The Swiss Bank Program, as a condition of giving amnesty from prosecution to offshore banks, requires these institutions to cooperate fully with efforts of taxing authorities to go after account holders. Those who kept money offshore and didn't report all of it or pay taxes on all of it need to be aware that banks are giving incredibly detailed information about account holders and account transactions.

Contacting a Boston tax law firm is advisable to explore what options may be available for individual account holders to avoid being prosecuted for criminal tax evasion and to minimize penalties for undeclared offshore funds.

Three More Banks Take Part in Swiss Bank Program

The $130 million in penalties paid by the three banks as part of non-prosecution agreements were calculated based on the value of offshore accounts held at the institutions by U.S.-affiliated account holders. Large penalties mean more money in the accounts -- which means greater risk for U.S. account holders.

Credit Agricole Suisse, one of the three banks, had 954 accounts with combined values of $1.8 billion. This resulted in penalties for the bank of $99.2 million.  Dreyfus & Sons had 855 accounts with a combined $1.76 billion in value. This resulted in penalties of $24 million.  Finally, the last bank -- Baumann -- will pay penalties of $7.7 million for the 167 U.S. accounts it held with a combined value of $514 million in funds.

Those who actually kept their money in these accounts can face tax collection efforts because their personal identifying information and other details must be provided by the banks in order to qualify for the Swiss Bank Program.  Even a failure to file an annual report of a foreign bank account (FBAR) has resulted in penalties in excess of the account values in the past -- so the financial consequences of U.S. authorities obtaining information can be devastating.

So many banks are turning on their customers to try to avoid prosecution for themselves, that the IRS Criminal Investigation Chief boasted: “the Swiss Bank Program has effectively decimated the hidden offshore banking industry.”  Every account holder must be aware of the risk their bank will be the next to participate in the Swiss Bank Program, if the institution hasn't already entered into a deal.

Attorney Kevin Thorn has a tax law firm in Boston that can help account holders find out if they are eligible for the Offshore Voluntary Disclosure Program (OVDP), which lessens penalties for voluntary reporting of offshore funds.  Other options for reducing or preventing legal action may be available as well, but acting quickly is key before an investigation into your offshore accounts begins. Call today to learn more.

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

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