201601.02
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Swiss Bank Account Lawyers (FATCA and OVDP) – International Tax

Golding & Golding - International Business Tax Lawyers

Golding & Golding – U.S. and International Tax Lawyers

Swiss Bank Account Lawyers: In accordance with FATCA (Foreign Account Tax Compliance Act) the U.S. is actively investigating and prosecuting tax cheats. Due to the increased amount of tax evasion and tax fraud running rampant in Switzerland, the Internal Revenue Service and Department of Justice formed a specific program to try and combat foreign tax evasion called the Swiss Bank Program.

It is important to note that International Tax Law enforcement is not limited to Switzerland, because as you will see below, there are a total of 89 foreign financial institutions located around the globe that have entered into agreements with the IRS.

Thus, if you knowingly or willfully engaged in tax fraud, you should consider considering entering the OVDP before you are detected by the IRS and possibly lose the right to enter the program.

As Provided by the Department of Justice:

  1. The United States Department of Justice has been and continues to be engaged in law enforcement action against individuals and entities that use foreign bank accounts to evade U.S. taxes and reporting requirements, and individuals and entities that facilitate the evasion of U.S. taxes and reporting requirements. In announcing today the Program for Swiss banks the Department of Justice intends to provide a path for Swiss Banks that are not currently the target of a criminal investigation authorized by the U.S. Department of Justice, Tax Division, to obtain resolution concerning their status in connection with the Department’s overall investigations, and to assist the Department of Justice in its law enforcement efforts. The Program does not apply to individuals and is not available to any Swiss bank as to which the Tax Division has authorized a formal criminal investigation concerning its operations.
  1. Switzerland welcomes the efforts of the Department of Justice to provide the Program and intends to draw the attention of the Swiss Banks to the terms of the Program and encourages them to consider participating therein. Switzerland notes that the Swiss Parliament by Declaration of 19 June 2013 stated its expectation that the Swiss Federal Council will take all measures within existing legal framework to put Swiss banks in a position to cooperate with the Department of Justice. Switzerland represents that applicable Swiss law will permit effective participation by the Swiss Banks on the terms set out in the Program.
  1. The signatories take note that the Swiss Financial Market Supervisory Authority intends to encourage, within its supervisory powers, all Swiss Banks to send a letter to U.S. Persons or Entities with U.S. Related Accounts at those Swiss Banks informing them of the Program and drawing their attention to the Internal Revenue Service Offshore Voluntary Disclosure Initiative.
  1. Switzerland intends to process treaty requests according to the Convention between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, signed at Washington on October 2, 1996, and the Protocol Amending the Convention, signed at Washington on September 23, 2009, if and when it is in force and applicable, as may be amended, and intends to do so on an expedited basis, including by providing additional personnel and the other necessary resources to process the requests.
  1. Noting the importance attached by both sides to providing a high level of personal data and privacy protection for all individuals as provided in their laws, the signatories understand that, if personal data are provided, they should only be used for purposes of law enforcement (which may include regulatory action) in the United States or as otherwise permitted by U.S. law. Personal data should only be retained for so long as necessary for these purposes.
  1. The signatories intend to resolve any difficulties or doubts arising from this Joint Statement by way of consultations. Deputy Attorney General United States Department of Justice

                                               

Beyond Switzerland, the United States is also cracking down on any Foreign Financial Institution (FFI) that is or previously had actively engaged in facilitating U.S. Tax Evasion and Tax Fraud by assisting US taxpayers with shielding and hiding money overseas.

The following is a list of the current banks that have entered into agreements with the United States regarding revealing the names of U.S. taxpayers who engaged in tax fraud. If you knowingly attempted (willfully) to avoid detection by actively placing your funds in these particular foreign financial institutions you may consider entering the Offshore Voluntary Disclosure Program (OVDP) before it is too late:

If you placed money into the following FFIs but your actions were “non-willful” there is another program you may enter called the IRS Streamlined Program Disclosure Program, which does not carry the 50% penalty with it.

Foreign Financial Institutions or Facilitators

  1. UBS AG
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
  3. Wegelin & Co.
  4. Liechtensteinische Landesbank AG
  5. Zurcher Kantonalbank
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
  11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
  12. Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
  13. BSI SA (effective 3/30/15)
  14. Vadian Bank AG (effective 5/8/15)
  15. Finter Bank Zurich AG (effective 5/15/15)  
  16. Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
  17. MediBank AG (effective 5/28/15)
  18. LBBW (Schweiz) AG (effective 5/28/15)
  19. Scobag Privatbank AG (effective 5/28/15)  
  20. Rothschild Bank AG (effective 6/3/15)
  21. Banca Credinvest SA (effective 6/3/15)
  22. Societe Generale Private Banking (Suisse) SA (effective 6/9/15)
  23. Berner Kantonalbank AG (effective 6/9/15)
  24. Bank Linth LLB AG (effective 6/19/15)
  25. Bank Sparhafen Zurich AG (effective 6/19/15)
  26. Ersparniskasse Schaffhausen AG (effective 6/26/15)
  27. Privatbank Von Graffenried AG (effective 7/2/15)
  28. Banque Pasche SA (effective 7/9/15)
  29. ARVEST Privatbank AG (effective 7/9/15)
  30. Mercantil Bank (Schweiz) AG (effective 7/16/15)
  31. Banque Cantonale Neuchateloise (effective 7/16/15)
  32. Nidwaldner Kantonalbank (effective 7/16/15)
  33. SB Saanen Bank AG (effective 7/23/15)
  34. Privatbank Bellerive AG (effective 7/23/15)
  35. PKB Privatbank AG (effective 7/30/15)
  36. Falcon Private Bank AG (effective 7/30/15)
  37. Credito Privato Commerciale in liquidazione SA (effective 7/30/15)
  38. Bank EKI Genossenschaft (effective 8/3/15)
  39. Privatbank Reichmuth & Co. (effective 8/6/15)
  40. Banque Cantonale du Jura SA (effective 8/6/15)
  41. Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA (effective 8/6/15)  
  42. bank zweiplus ag (effective 8/20/15)
  43. Banca dello Stato del Cantone Ticino (effective 8/20/15)
  44. Hypothekarbank Lenzburg AG (effective 8/27/15)
  45. Schroder & Co. Bank AG (effective 9/3/15)
  46. Valiant Bank AG (effective 9/10/15)
  47. Bank La Roche & Co AG (effective 9/15/15)
  48. Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15)
  49. Galler Kantonalbank AG (effective 9/17/15)
  50. Gutzwiller & Cie, Banquiers (effective 9/17/15)
  51. Migros Bank AG (effective 9/25/15)
  52. Graubundner Katonalbank (effective 9/25/15)
  53. BHF-Bank (Schweiz) AG (effective 10/1/15)
  54. Finacor SA (effective 10/6/15)
  55. Schaffhauser Kantonalbank (effective 10/8/15)
  56. BBVA Suiza S.A. (effective 10/16/15)
  57. Piguet Galland & Cie SA (effective 10/23/15)
  58. Luzerner Kantonalbank AG (effective 10/29/15)
  59. Habib Bank AG Zurich (effective 10/29/15)
  60. Banque Heritage SA (effective 10/29/15)
  61. Hyposwiss Private Bank Genève S.A. (effective 10/29/15)
  62. Banque Bonhôte & Cie SA (effective 11/3/15)
  63. Banque Internationale a Luxembourg (Suisse) SA (effective 11/12/15)
  64. Zuger Kantonalbank (effective 11/12/15)
  65. Standard Chartered Bank (Switzerland) SA, en liquidation (effective 11/13/15)
  66. Maerki Baumann & Co. AG (effective 11/17/15)
  67. BNP Paribas (Suisse) SA (effective 11/19/15)
  68. KBL (Switzerland) Ltd. (effective 11/19/15)
  69. Bank CIC (Switzerland) Ltd. (effective 11/19/15)
  70. Privatbank IHAG Zürich AG (effective 11/24/15)
  71. Deutsche Bank (Suisse) SA (effective 11/24/15)
  72. EFG Bank AG (effective 12/3/15)
  73. EFG Bank European Financial Group SA, Geneva (effective 12/3/15)
  74. Aargauische Kantonalbank (effective 12/8/15)
  75. Cornèr Banca SA (effective 12/10/15)
  76. Bank Coop AG (effective 12/10/15)
  77. Crédit Agricole (Suisse) SA (effective 12/15/15)
  78. Dreyfus Sons & Co Ltd, Banquiers (effective 12/15/15)
  79. Baumann & Cie, Banquiers (effective 12/15/15)
  80. Bordier & Cie Switzerland (effective 12/17/15)
  81. PBZ Verwaltungs AG (effective 12/17/15)
  82. PostFinance AG (effective 12/17/15)
  83. Edmond de Rothschild (Suisse) SA (effective 12/18/15)
  84. Edmond de Rothschild (Lugano) SA (effective 12/18/15)
  85. Bank J. Safra Sarasin AG (effective 12/23/15)
  86. Coutts & Co Ltd (effective 12/23/15)
  87. Gonet & Cie (effective 12/23/15)
  88. Banque Cantonal du Valais (effective 12/23/15)
  89. Banque Cantonale Vaudoise (effective 12/23/15)

                                                           

If you held accounts in any of the above-referenced Banks/Foreign Financial Institutions and your actions were willful, the clock is already ticking. If the IRS begins examining you before you have a chance to enter into OVDP and seek a form of “amnesty” it will be too late.

                                                           

OVDP and FATCA – An Introduction

As a US taxpayer (US citizens, Legal Permanent Residents, and Foreign Nationals otherwise subject to US income tax and reporting requirements) you are required to report and disclose your foreign bank accounts, foreign financial accounts, and certain offshore assets – as well as report your foreign income on an FBAR, Schedule B, and 8938 Form.The main reason for the United States’ sudden interest in international tax law is because the Internal Revenue Service (IRS) has recovered billions of dollars from taxpayers who did not comply with international tax law filing requirements.

Examples of Reportable Accounts include:

  • Foreign Bank Accounts
  • Foreign Savings Accounts
  • Foreign Investment Accounts
  • Foreign Securities Accounts
  • Foreign Mutual Funds
  • Foreign Trusts
  • Foreign Retirement Plans
  • Foreign Business and/or Corporate Accounts
  • Insurance Policies
  • Foreign Accounts held in a CFC (Controlled Foreign Corporation); or
  • Foreign Accounts held in a PFIC (Passive Foreign Investment Company)

The failure to timely and properly report foreign income and overseas assets and accounts can result in staggeringly high penalties, which the Internal Revenue Service enforces against all taxpayers. If you find yourself in this impossible situation, what are your options?

The most common option for individuals and businesses that have unreported and undisclosed offshore and foreign accounts is to enter the OVDP (Offshore Voluntary Disclosure Program). OVDP is the International Tax Law Program for U.S. Taxpayers (including Legal Permanent Residents and Expats) seeking IRS tax law compliance. The main reason why people enter the OVDP program is because by doing so they can almost always avoid criminal prosecution of their international tax crimes.

                                

Minimal Unreported Foreign Income

It is important to keep in mind that “Account Values” and “Culpability” are two completely different concepts. In other words, knowingly or willfully failing to report offshore assets and foreign income, no matter how small, is considered tax evasion and/or tax fraud and can subject a person to criminal prosecution and penalties reaching 100% of the account value (as well as outstanding taxes, interest and other fines).

                                

Why Enter the OVDP Program?

The Offshore Voluntary Disclosure Program is open to any US taxpayer who has offshore and foreign accounts and has not reported the financial information to the Internal Revenue Service (restrictions apply). There are some basic program requirements, with the main one being that the person/business who is applying under this amnesty program is not under IRS examination.

The reason is simple: OVDP is a voluntary program and if you are only entering because you are already under IRS examination, then technically you are not voluntarily entering the program – rather, you are doing so under duress.

                                

What Type of Accounts Qualify Under OVDP?

Any account that would have to be included on either an FBAR or 8938 form as well as additional income generating assets such as rental properties. It should be noted that the requirements are different for the modified streamlined program, in which the taxpayer penalties are limited to only assets that are actually listed on either an FBAR or 8938 form; thus the value of a rental property (reduced by any outstanding mortgage) would not be calculated into the penalty amount in a streamlined application, but it would be applicable in an OVDP submission.

An OVDP submission involves the failure of a taxpayer(s) to report foreign and overseas accounts at Foreign Financial Institutions such as: Foreign Bank Accounts, Foreign Financial Accounts, Foreign Retirement Accounts, Foreign Trading Accounts, Foreign Insurance, and Foreign Income, including 8938s, FBAR, Schedule B, 5741, 3520, and more.

                                

What are the Requirements of OVDP?

The goal of OVDP is to bring individuals and businesses with unreported foreign and overseas accounts and income into U.S. Tax law compliance. While the requirements may seem overwhelming, if you select an international tax attorney who is experienced in handling these types of submissions, it can be a fairly simple routine — even in this sophisticated area of law — while providing you protection under the Attorney-Client Privilege.

The Result: A stress-free compliance plan program that works for you, your family, and your business to bring you into compliance!

The Key points to OVDP are as follows:

OVDP Pre-Clearance Letter

First, the OVDP Applicant submits a request to enter the OVDP Program (Pre-Clearance). The OVDP pre-clearance letter is simple and straightforward. Essentially, the taxpayer is asking Internal Revenue Service’s criminal investigation unit whether they will qualify for submission. In other words, before a taxpayer is required to divulge all of his/her foreign financial information to the IRS, the taxpayer will have the opportunity to know if they qualify for the program.

For the most part, Pre-Clearance is standard procedure and unless the taxpayer is under a criminal investigation by the Internal Revenue Service or other government authority, the applicant should qualify for the program.

                                

IRS Criminal Investigation Unit Evaluation

The IRS Criminal Investigation Unit determines if the applicant is “cleared” for entrance into the OVDP program. Generally, the process should not take more than 30 days. At around 30-day mark, if the applicant has been successfully approved then the attorney or applicant (if the applicant directly submitted to the program) will receive a letter from the Internal Revenue Service confirming the applicant’s entry into the program and requesting that the initial OVDP application be submitted within 45 days of the date of the letter.

The next phase (45-day letter submission) is not the full submission, but rather it is a summary of the information the taxpayer is going to submit under the program, and includes more specific information about the bank accounts, account numbers, and other identifying information.

                                

Initial OVDP Application Submission 

After the Internal Revenue Service receives the applicant’s OVDP letter and attachments, the Internal Revenue Service will review the information. If it is sufficient, then the IRS will send a second letter requesting that the taxpayer submit the full, comprehensive Offshore Voluntary Disclosure Program Application. The next phase of the OVDP is much more intensive and requires the preparation and submission of several documents to the Internal Revenue Service for their review and approval.

                                

What is Included in the Full OVDP Submission?

The full OVDP application includes:

  • Eight (8) years of Amended Tax Return filings;
  • Eight (8) Years of FBAR (Foreign Bank and Account Reporting Statements);
  • Penalty Computation Worksheet; and
  • Various OVDP specific documents in support of the application

Under this program, the Internal Revenue Service wants to know of all the income that was generated under these accounts that was not properly reported previously. The way the taxpayer accomplishes this is by amending tax returns for eight years.

Generally, if the taxpayer has not previously reported his accounts then there are common forms which were probably excluded from the prior year’s tax returns and include 8938 Forms, Schedule B forms, 3520 Forms, 5471 Forms, 8621 Forms,  as well as proof of filing of FBARs (Foreign Bank and Financial Account Reports).

The taxpayer is required to pay the outstanding tax liability for the eight years within the disclosure period – as well as payment of interest along with another 20% penalty on that amount. For example: if the taxpayer owed $20,000 in taxes over the last eight years then they would also have to include in check the amount of $4000 the cover the 20% penalty on the $20,000 in outstanding taxes, as well as estimated interest.

                                

What Are the Fees/Penalties under the OVDP Program?

In accordance with OVDP filing requirements, The Applicant will then be required to pay the outstanding tax, along with estimated interest, a 20% penalty on the outstanding tax, as well as an “FBAR” Penalty. The Penalty is 27.5% (or 50% if any of the foreign accounts are held at an IRS “Bad Bank”) on the highest years “annual aggregate total” of unreported accounts (Accounts which were previously reported are not calculated into the penalty amount).

For OVDP, the annual aggregate total is determined by adding the “maximum value” of each account for each year, in each of the last 8 years. To determine what the maximum value is, the taxpayer will add up the highest balances of all their accounts for each year. Thus, for each tax year within the compliance period, the application will locate the highest balance for each account for each year, and total up the value to determine the maximum value for each year.

Thereafter, the OVDP applicant selects the highest year’s value, and multiplies it by either 27.5%, or possibly 50% if any of the money was being held in what the IRS considers to be one of the “bad banks.” When a person is completing the penalty portion of the application, the two most important things are to breathe, and remember that by entering the program the applicant is seeking to avoid CRIMINAL PROSECUTION!

When it comes to the Streamlined Program, the penalty is limited to 5% on the highest “year-end” balance for the last 6-years. The reason is that if the person was non-willful, they should not be overly-penalized if there was an artificial increase in the value of the bank accounts – such as from the sale of a home during the tax year.

  • Click Here for Golding & Golding’s OVDP Update.

                                                   

Why Should You Enter the OVDP Program?

It’s simple: if you qualify to enter the IRS OVDP Program, then you can significantly reduce your outstanding tax penalties and usually avoid criminal prosecution.

  • Under the new FATCA laws (Foreign Account Tax Compliance Act), thousands of Foreign Financial Institutions (FFIs) are reporting foreign income, assets, bank and financial accounts belonging to U.S. citizens, Legal Permanent Residents, and Non-Residents who live in the U.S. or maintain a U.S. address. Once the IRS gets wind of this information and begins an examination, you are disqualified from entering either the OVDP or Modified Streamlined Programs.

Moreover, many of these FFI’s are starting to freeze and even forfeiting the money in these accounts if the account owner cannot prove compliance with FBAR filing, FATCA and OVDP (if applicable).

  • Click Here for a List of Frequently Asked Questions.

                          

FLAT-FEE & FULL-SERVICE

Our experienced International Tax Lawyers and Enrolled Agents (Highest Tax Credential issued by the IRS) have represented numerous individuals and businesses in over 35 countries with OVDP. Unlike other firms, our Tax Attorneys handle the entire OVDP Application process and Streamlined Program application process in-house, on a flat-fee arrangement from start-to-finish – including preparing applicant tax returns. We do not “pawn” you off to an Associate or accountant – usually with little to no experience in International Tax Law and OVDP.

                                    

Be Aware – Fraud Warning!

In the last few years, we have been inundated by individuals letting us know that they were “sold”  by inexperienced attorneys and CPAs with no real International Tax experience (CPAs may have Accounting or Auditing experience, but not necessarily any ‘Tax’ experience) who “scared” them into entering the program before they felt ready to do so. Unfortunately, these unscrupulous attorneys use scare tactics and “low introductory fees” to bait taxpayers, which results in the OVDP Applicants suffering serious tax issues and complications with the IRS.

Our flat fee, in-house arrangement allows our clients to concentrate on getting themselves and their families OVDP compliant, while allowing our firm to stand by our clients in every phase of process, each step of the way!