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END OF THE BATTLE TO DISCLOSE SECRET OFFSHORE ACCOUNTS?

Tax Lawyer DCANOTHER JUSTICE DEPARTMENT PROGRAM FORCES SWISS BANKS AGAINST THEIR U.S. ACCOUNT HOLDERS

The deadline for the Department of Justice program designed to identify United States taxpayers who have unreported Swiss bank accounts bank accounts is April 30, 2014.  The U.S. and Switzerland issued a joint statement in the fall of 2013 announcing a new program entitled “Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks.”  Available only to Swiss banks not currently under criminal investigation, this unique program is designed to provide Swiss banks a way of resolving any potential criminal exposure under U.S. tax laws.

A Swiss bank that has reason to believe that it may have committed tax-related or monetary transaction offenses in connection with undeclared U.S. accounts may apply to the program.  The bank then will be required to provide detailed information on all accounts held by U.S. taxpayers and pay substantial penalties based upon the amount held in the identified accounts.  In exchange, the government will agree not to prosecute the participating bank.  The result of this program will be to fully eliminate any ability of a U.S. taxpayer to conceal a Swiss bank account from the IRS.

Upon entry into a non-prosecution agreement, the Swiss bank must disclose detailed financial information on all accounts in which any U.S. taxpayer has any kind of interest.  Basic information must be turned over, including the maximum value of each account, the identity of any individual or entity affiliated with each account, and the interest that each individual or entity has in each account.   Once a Swiss bank complies with the initial disclosures of this program and receives an executed non-prosecution agreement, taxpayer information will be turned over on April 30th, 2014.

Any United States taxpayer who has or had an interest, no matter how indirect, in funds held in an unreported Swiss bank account should make a voluntary disclosure to the IRS before being turned over by their Swiss Bank to the IRS.  Eligible individuals can enroll in the IRS’s Offshore Voluntary Disclosure Program (OVDP) and disclose their foreign accounts, pay certain penalties, forego the risk of criminal investigation or prosecution, and become compliant with their tax obligations.  The IRS has historically been unwilling to permit a taxpayer to enter into the OVDP after the taxpayer’s unreported foreign bank account has been disclosed to the U.S.