The implementation of FATCA and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to non-U.S. investments. Because the circumstances of taxpayers with non-U.S. investments vary widely, the IRS offers the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those investments:
- Offshore Voluntary Disclosure Program;
Note: The Offshore Voluntary Disclosure Program (OVDP) is closing. Refer to the OVDP FAQs for an outline of the sunset provisions.
- Streamlined Filing Compliance Procedures;
- Delinquent FBAR submission procedures; and
- Delinquent international information return submission procedures.
The Department of Justice announced today that it has reached final resolutions with banks that have met the requirements of the Swiss Bank Program. The Program provided a path for Swiss banks to resolve potential criminal liabilities in the United States, and to cooperate in the Department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The Program also provided a path for those Swiss banks that were not engaged in wrongful acts but nonetheless wanted a resolution of their status. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the Program.
The House Financial Services Committee on Monday released a staff report of its investigation into the U.S. Department of Justice’s decision not to prosecute HSBC or any of its executives or employees for serious violations of U.S. anti-money laundering laws and related offenses.
On June 19, 2015, the Department of Justice announced that two more banks reached resolutions under its Swiss Bank Program. Those banks are Bank Linth LLB AG (Bank Linth) and Bank Sparhafen Zurich AG (BSZ).
According to the terms of the non-prosecution agreements, each bank has agreed to cooperate in any related criminal or civil proceedings, demonstrate that it is implementing controls to stop misconduct involving unreported U.S. accounts, and pay penalties. In exchange, DOJ has agreed not to prosecute these banks for tax-related crimes.
In addition, each bank is encouraging its U.S. accountholders to come into compliance Read More
On May 28, 2015, the Department of Justice announced the addition of four banks to its Swiss Bank Program. They are as follows:
• Société Générale Private Banking (Lugano-Svizzera)
• MediBank AG
• LBBW (Schweiz) AG
• Scobag Privatbank AG
For those unfamiliar with the Department of Justice’s Swiss Bank Program, a slight digression may be in order. The Swiss Bank Program was unveiled on August 29, 2013. Read More
Americans with Israeli bank or other financial accounts could face a tough tax season in 2015 if they do not come forward and disclose their assets to the IRS. Israeli banks have come under increased scrutiny by the IRS in regards to disclosing the accounts of their American clients. In particular, three Israeli banks- Bank Hapoalim, Bank Leumi and Mizrahi Tefahot- have been under investigation by the Department of Justice.
The first Israeli bank to now bow to the United States is Bank Leumi. A deferred prosecution agreement between the Bank Leumi Group and the U.S. Department of Justice was filed today in the Central District of California that defers prosecution on a criminal information charging the bank with conspiracy to aid and assist in the preparation and presentation of false tax returns and other documents to the Internal Revenue Service. This is the same type Read More
In order to avoid a fate similar to UBS, Bank Leumi recently admitted to engaging in some tax “hanky panky.” One of the largest banks in Israel, Leumi admitted that it helped U.S. taxpayers evade their taxes. How so? By helping these individuals to hide their income and assets in offshore accounts in Israel and in other parts of the world.
This did not come without a price – a steep one. To account for its criminal conduct, Bank Leumi Group will pay the IRS a whopping $270 million in fines and an additional $ 130 million to New York’s Department of Financial Services. The terms of the deal are strikingly similar to the one that UBS entered into a while ago with the United States – an admission of wrongdoing in exchange for immunity from prosecution. This is what is referred to colloquially as a “deferred prosecution agreement.” Read More
As I reported in a previous article, the Department of Justice (DOJ) and the IRS instantly began to drool in anticipation when The Foreign Account Tax Compliance Act was passed in March of 2010. This gives them enforcement tools to make foreign countries and banking institutions play by our rules whether they like it or not. The Department of Justice has gone even further thinking it has been given the power to make foreign treaties without the constitutionally required Senate ratification. The Senate so far doesn’t seem to mind, but some other countries and taxpayers are taking offense.
FATCA gets its teeth from two provisions: Read More
Recently, tax shelters have become the target of much prosecution by the Department of Justice. In the largest criminal tax case ever filed, professional services company KMPG LLP admitted to engaging in fraud and generating at least $11 billion dollars in false tax losses. The multi-billion dollar criminal tax fraud conspiracy involved the elaborate design, marketing, and implementation of fraudulent tax shelters.
Since the 2005 KPMG indictment and subsequent guilty plea, the Department of Justice has continued in its quest to uncover instances of tax shelter fraud. The case of Chicago tax lawyer and former Seyfarth Shaw LLP partner, John E. Rogers, is among the latest in a series of tax shelter fraud criminal prosecutions. Starting in 2010, the U.S. Department of Justice targeted John E. Rogers, ex-Seyfarth Shaw LLP partner, with a civil suit alleging he Read More
Yesterday we posted “Monday was the Swiss Bank’s Deadline to Reveal Hidden US Accounts to the IRS!” which discussed that approximately 300 Swiss Banks have until the end of today, Monday December 16, 2013, to decide whether to turnover their records to the Internal Revenue Service.
Today Walliser Kantonalbank became the latest Swiss bank to Accept United States Deal to avoid prosecution.
In a statement, Walliser Kantonalbank said that it had never focused on acquiring American clients but that it was unable to guarantee that all U.S. customers had fully complied with their United States tax obligations. Read More
On August 29, 2013, the US Department of Justice (“DOJ”) and Swiss authorities jointly announced a landmark non-prosecution program for any Swiss bank that is not a current target of US criminal investigation. On the Swiss side, the agreement with DOJ was signed by the Swiss Federal Department of Finance. The program is designed to encourage all Swiss banks to come forward and admit the role they played in assisting US persons to evade tax. Participating banks that meet all of the demands made by DOJ are eligible for non-prosecution agreements – but employees and agents of the banks are shockingly not protected.
In order to participate, the Swiss banks must undertake arduous internal investigations to sniff out any “US related accounts”, appoint an independent examiner to review the due diligence, make a complete disclosure about the bank’s cross-border activities; provide detailed information on all US related accounts that existed on August 1 2008; and pay a penalty of 20, 30 or 50 percent of the maximum value of all non-disclosed US accounts that were held by the bank. The applicable penalty percentage depends on the date the accounts were opened with the bank with the penalty increasing after news became public that the US government was investigating Swiss banks for offshore tax evasion (a 20 percent penalty is imposed on the maximum aggregate dollar value of all undisclosed US accounts that existed at the bank on August 1, 2008; increasing to 30 percent for undisclosed accounts that were opened after that date, but on or before February 28, 2009 and to 50 percent for undisclosed accounts opened after February 28,2009).
Full details can be found in the signed Agreement.
What is a “US-Related Account”? Read More