USA: “IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance“

The new revisions to the US offshore voluntary disclosure program, which we posted on 6/18/14 “IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance“, now provides for an increased 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} FBAR Penalties for ‘Willful’ Non-Disclosers.

This group includes those individuals who have offshore bank accounts with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a government investigation. IRS has published a list of those foreign financial institutions or facilitators.

The complete list is as follows:

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

7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates

8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford TrustA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. Company, Ltd.

9. HSBC India

10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield).

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 TrustA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. 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)

A list of foreign financial institutions or facilitators meeting this criteria is available.

Of course, the IRS may add names to that list at any time, and whole groups of taxpayers will then be cut-off from OVDP without prior notice.

In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. account holders to come into compliance with their U.S. tax and disclosure obligationsReporting obligations refer to the mandatory requirements imposed by tax authorities on entities or individuals to disclose specific financial and operational information. These obligations are designed to ensure transparency in taxation, help detect and prevent tax evasion, and support compliance with national and international tax standards. Such requirements can vary widely in scope, depending on jurisdiction and the nature of....  While U.S. account holders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;

• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

• Cooperate in treaty requests for account information;

• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed (a/k/a Levers List);

• Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligationsReporting obligations refer to the mandatory requirements imposed by tax authorities on entities or individuals to disclose specific financial and operational information. These obligations are designed to ensure transparency in taxation, help detect and prevent tax evasion, and support compliance with national and international tax standards. Such requirements can vary widely in scope, depending on jurisdiction and the nature of...; and

• Pay appropriate penalties.

• Banks meeting all of the above requirements are eligible for a non-prosecution agreement.

“With each Additional Agreement, the world where criminals can hide their money is becoming smaller and smaller.  Those who circumvent offshore disclosure laws have little room to hide.”

said Chief Richard Weber of IRS-Criminal Investigation. The same goes for taxpayers who worked with a “facilitator” who helped the taxpayer establish or maintain an offshore arrangement if the facilitator has been publicly identified as being under investigation or as cooperating with a government investigation.

Taxpayers who had undeclared income from one of these 14 Banks are still be eligible to enter the OVDP, but they will be subject to a 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} offshore penalty, rather than the existing 27.5 percent penalty.

Of course if the IRS already has a particular taxpayer’s name, then that person will not be eligible to enter the OVDP, and could be subject to multiple FBAR penalties.

Original Post By:  Ronald Marini