Hmm… I'm starting to detect a pattern of sorts when it comes to Swiss banks and their interactions with the IRS. It's almost as if every small, private Swiss bank has entered or will enter into a non-prosecution agreement with the IRS and Department of Justice. Last week, the DOJ announced that PKB Privatbank AG, Falcon Private Bank AG, and Credito Privato Commerciale in liquidazione SA (CPC) (UPDATE 8/5/2015 Bank EKI Genossenschaft added August 3, 2015) (UPDATE 8/6/2015 Privatbank Reichmuth & Co., Banque Cantonale du Jura SA and Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA) have reached resolutions under the department’s Swiss Bank Program. This means that these particular Swiss banks will have (relatively) small fines to pay and will be required to either close or freeze US-related accounts. From the press release, the Department of Justice states this:
"Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program."
However, as an OVDP lawyer, I can tell you some of the information provided by the DOJ is misleading.
- If you can't pay the penalty, you are allowed to pay what you can afford. The offshore penalty becomes just like any other tax balance and can be negotiated. Do not let an inability to pay the penalty dissuade you from entering into the OVDP and accepting the offshore penalty of 27.5% or 50% in the case of FAQ 7.2.
- If your bank is on the list — provided that you were non-willful in your FBAR filing — and you live overseas, you can still enter into the streamlined program and pay the 5% or 0% penalty.
- Even if you don't qualify for the streamlined program, you can still enter into an OVDP, have criminal prosecution protections, and argue for a lower penalty in the opt-out phase of your voluntary disclosure.
If your bank has entered — or has the possibility of entering — into a non-prosecution agreement with the DOJ, contact us. You can set up a complimentary consultation; we can let you know if you should enter into a disclosure program, and if so, which would be best for your scenario.
Current list of Foreign Financial Institutions or Facilitators (updBank EKI Genossenschaft (effective 8/3/15)ated to 7/30/2015)
- UBS AG
- Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
- Wegelin & Co.
- Liechtensteinische Landesbank AG
- Zurcher Kantonalbank
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
- CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
- The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
- Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
- 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)
- BSI SA (effective 3/30/15)
- Vadian Bank AG (effective 5/8/15)
- Finter Bank Zurich AG (effective 5/15/15)
- Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
- MediBank AG (effective 5/28/15)
- LBBW (Schweiz) AG (effective 5/28/15)
- Scobag Privatbank AG (effective 5/28/15)
- Rothschild Bank AG (effective 6/3/15)
- Banca Credinvest SA (effective 6/3/15)
- Societe Generale Private Banking (Suisse) SA (effective 6/9/15)
- Berner Kantonalbank AG (effective 6/9/15)
- Bank Linth LLB AG (effective 6/19/15)
- Bank Sparhafen Zurich AG (effective 6/19/15)
- Ersparniskasse Schaffhausen AG (effective 6/26/15)
- Privatbank Von Graffenried AG (effective 7/2/15)
- Banque Pasche SA (effective 7/9/15)
- ARVEST Privatbank AG (effective 7/9/15)
- Mercantil Bank (Schweiz) AG (effective 7/16/15)
- Banque Cantonale Neuchateloise (effective 7/16/15)
- Nidwaldner Kantonalbank (effective 7/16/15)
- SB Saanen Bank AG (effective 7/23/15)
- Privatbank Bellerive AG (effective 7/23/15)
- PKB Privatbank AG (effective 7/30/15)
- Falcon Private Bank AG (effective 7/30/15)
- Credito Privato Commerciale in liquidazione SA (effective 7/30/15)
- Bank EKI Genossenschaft (effective 8/3/15)
- Privatbank Reichmuth & Co. (effective 8/6/2015)
- Banque Cantonale du Jura SA (effective 8/6/2015)
- Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA) (effective 8/6/2015)
