If you are a US person (US citizen, Legal Permanent Resident, or Foreign National who meets the Substantial Presence Test) and you have unreported foreign accounts, income or assets – it has just went from bad to worse.

Foreign Financial Institutions or Facilitators

The US government/IRS maintains a list of bad banks (aka Foreign Financial Institutions or Facilitators). These are banks that worked with US account holders specifically in order to avoid/evade US tax. Even though the bad bank list generally refers to foreign financial institutions, it also includes facilitators – individuals or organizations that assisted US account holders with avoiding US tax.

Sean M. Golding, Board-Certified Tax Law Specialist - International Tax Lawyer for Offshore Voluntary Disclosure

Sean M. Golding, Board-Certified Tax Law Specialist – International Tax Lawyer for Offshore Voluntary Disclosure

The IRS updates this list periodically and generally adds a few institutions to the list as they uncover more and more offshore tax fraud. On November 15, 2016 the IRS added 47 more names to this list.

Not only does this show that the IRS is actively enforcing (and will continue to enforce) offshore account reporting, but is made a lot more difficult and costly for individuals, estates, or businesses seeking to enter OVDP.

OVDP

OVDP is the traditional Offshore Voluntary Disclosure Program. It is a program mainly designed for individuals or businesses that were willful in their failure to get into compliance with their offshore and foreign assets, income, and money.

When the program first started many years ago the penalty was a 20% FBAR/8938 penalty unless very strict exceptions apply.

Fast-forward to 2016-2017 and the penalty has been modified. Now, the penalty is 27.5% and if any of the money is located in or with one of the Foreign Financial Institutions or Facilitators, the penalty skyrockets to 50%. Moreover, the 50% penalty applies to ALL the unreported money – NOT just the money that is held at one of these bad banks or by bad investor.

If this trend continues, there will literally be hundreds if not thousands of Foreign Financial Institutions or Facilitators added to this list before the end of the year.

Streamlined and Non-Willfulness

It is important to keep in mind that if you were non-willful, then it does not matter if you bank with one of these Foreign Financial Institutions or Facilitators — you do not get hit with the bigger penalty. In other words, you have to be “willful” in order to be subject to the massive penalty associated with this list.

The mere fact that you may have an account with one of these institutions or facilitators does not automatically bootstrap your penalty up to 50%; it still requires an element of willfulness.

List of 47 New Facilitators

  1. Bradley Birkenfeld (effective 11/15/16)
  2. Renzo Gadola (effective 11/15/16)
  3. Martin Lack (effective 11/15/16)
  4. Christos Bagios (effective 11/15/16)
  5. Joshua Vandyk (effective 11/15/16)
  6. Eric St-Cyr (effective 11/15/16)
  7. Patrick Poulin (effective 11/15/16)
  8. Andreas Bachmann (effective 11/15/16)
  9. Josef Dörig (effective 11/15/16)
  10. David Kalai and Nadav Kalai (effective 11/15/16)
  11. David Almog (effective 11/15/16)
  12. Hansruedi Schumacher (effective 11/15/16)
  13. Matthias Rickenbach (effective 11/15/16)
  14. Cem Can (effective 11/15/16)
  15. IPC Management Services, LLC (effective 11/15/16)
  16. IPC Corporate Services Inc. (effective 11/15/16)
  17. IPC Corporate Services LLC (effective 11/15/16)
  18. Titan International Securities, Inc. (effective 11/15/16)
  19. Legacy Global Markets S.A. (effective 11/15/16)
  20. Unicorn International Securities LLC (effective 11/15/16)
  21. Andrew Godfrey (effective 11/15/16)
  22. Michael Little (effective 11/15/16)
  23. Edgar Paltzer (effective 11/15/16)
  24. Peter Amrein (effective 11/15/16)
  25. Daniela Casadei (effective 11/15/16)
  26. Fabio Frazzetto (effective 11/15/16)
  27. Michele Bergantino (effective 11/15/16)
  28. Mario Staggl (effective 11/15/16)
  29. Beda Singenberger (effective 11/15/16)
  30. Gian Gisler (effective 11/15/16)
  31. Felix M. Mathis (effective 11/15/16)
  32. Michael Berlinka (effective 11/15/16)
  33. Urs Frei (effective 11/15/16)
  34. Roger Keller (effective 11/15/16)
  35. Josef Beck (effective 11/15/16)
  36. Hans Thomann (effective 11/15/16)
  37. Stephan Fellmann (effective 11/15/16)
  38. Otto Huppi (effective 11/15/16)
  39. Christof Reist (effective 11/15/16)
  40. Stefan Buck (effective 11/15/16)
  41. Marco Parenti Adami (effective 11/15/16)
  42. Emanuel Agustino (effective 11/15/16)
  43. Roger Schaerer (effective 11/15/16)
  44. Markus Walder (effective 11/15/16)
  45. Susanne D. Rüegg Meier (effective 11/15/16)
  46. Martin Dunki (effective 11/15/16)
  47. Robert Bandfield (effective 11/15/16)

Get Into Compliance with Offshore Voluntary Disclosure

Offshore Voluntary Disclosure Tax law is very complex.

Golding & Golding, A PLC

We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.