Foreign Bank list hits 50; Belize Bank hit with John Doe summons


Well, our old buddies at the IRS are at it again. Seemingly unsatisfied with their recent descent on Switzerland, the next target has a bit more sand and some much warmer waters. As I've said before, the IRS has no global boundaries when it comes to their power over American citizens. Whether it's Topeka or Timbuktu, if you are a US citizen, the IRS holds a claim to a portion of every dollar you earn. So, if you're planning on stashing your stash in a different country, just know the IRS is looking to find it. It might be 5, 10, or even 20 years before they come knocking, but they're always on the prowl. Here's the latest information on offshore accounts:


From a US Treasury Press Release of September 16, 2015:


A federal court in Miami entered an order today authorizing the Internal Revenue Service (IRS) to serve a “John Doe” summons seeking information about U.S. taxpayers who may hold offshore accounts at Belize Bank International Limited (BBIL) or Belize Bank Limited (BBL), the Justice Department announced today. The order, which was entered by U.S. District Judge Ursula Ungaro, granted the United States’ petition for permission to seek records of BBIL’s and BBL’s correspondent accounts at Bank of America, N.A. and Citibank, N.A. Those records will allow the IRS to identify U.S. taxpayers who hold or held interests in financial accounts at BBIL and BBL, as well as other financial institutions that used the same correspondent accounts.


How does a John Doe summons work?


A John Doe summons is any summons where the name of the taxpayer under investigation is unknown and therefore not specifically identified. Dissimilar to a typical IRS summons, a John Doe requires federal court approval. The statutory requirements are located in 26 USC 7609(f)(1) through (3). Essentially, a John Doe summons allows the IRS to go to a bank and rather testily demand that said bank tell on all their customers who fit a certain criteria. If it sounds like your childhood babysitter demanding that you tattle on your older sibling, then you've got the picture.


If I was working for the IRS, the type of criteria I would be looking for — aside from the obvious accounts opened with US passports (the IRS is aware of the dual passport trick) — are:


  • Inbound and outbound wires to and from the US;
  • Use of shell companies (most wealth in Belize is not generated in Belize; most accounts are held in alter-egos, not personally); and
  • Any accounts that have US addresses, US phone numbers, or US email addresses associated with them.


BBIL added to Foreign Financial Institution List


Additionally, BBIL was added to the Foreign Financial Institution or Facilitators list. When a bank is on this list, and a taxpayer wishes to get into an Offshore Voluntary Disclosure Program, that taxpayer will be subjected to a 50% offshore penalty on all unreported offshore assets, including rental real estate. The IRS puts these banks on the list as they feel that if the certainty of being able to prosecute account holders is so easily attainable, it makes a disclosure less "voluntary" and more "mandatory." The IRS claims it is seeking to punish taxpayers who have attempted to evade detection.


Your life is NOT over if you have banked with BBIL


If you bank with BBIL, you may have to enter into an OVDP and pay the standard 50% penalty per OVDP FAQ 7.2. But, in some circumstances, you may be able to enter into a Streamlined Offshore Program and pay either 5% — or the even more desired 0% — penalty. Also, if you enter into a full OVDP, you may be able to opt-out and argue for lower non-willful penalties. Also, because foreign rental real estate comes out of the penalty base, there is more hope for a reasonable settlement.


Regardless of whatever penalties you may have incurred, it's important to keep your head up and keep moving forward. A proper strategy has a better chance of bringing about a positive resolution, but nothing is guaranteed. What is important, especially if you find yourself stressed out and anxious, is to find a path to a resolution that can put this whole tax mess in the rearview mirror. There's nothing worse than living in fear of the IRS as you wait for their hammer to come crashing down. Taking a proactive approach can not only help you get a better resolution, but it can help you keep your sanity in a trying time.


Other foreign banks added in September


Aside from BBIL, a few more banks have been added in September. They are: Schroder & Co. Bank AG, Bank La Roche & Co AG, St. Galler Kantonalbank AG, and E. Gutzwiller & Cie, Banquiers.


If you bank is on this list, or if you have an international tax issue that's been nagging you, contact us to schedule a free consultation. We can help you decide if you should get into a disclosure program, and if so, which would be the best for you.


Here is the complete list of Foreign Banks or Financial Institutions as of September 17, 2015:

  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. St. Galler Kantonalbank AG (effective 9/17/15)
  50. E. Gutzwiller & Cie, Banquiers (effective 9/17/15)