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Yearly Archives: 2015

48 Swiss Banks Are Turning Over Their US Client's Names

September 17, 2015

The number of Swiss banks that have entered deferred prosecution agreements with the U.S. government keeps growing. The IRS keeps updating its list of foreign banks where the holders of these offshore accounts are subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP). This penalty is based on the highest account balance measured over up to eight years.

On July 13, 2015 we posted 2 More Swiss Banks Agree to Turn Over Names of US DepositorsBring the Total to 29 Banks!" well make that 47 now. The IRS recently added Schroder & Co. Bank AG (effective 9/3/15), Valiant Bank AG (effective 9/10/15), Bank La Roche & Co AG (effective 9/15/15) and Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15).
  1. UBS AG (effective 8/4/14)
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd. (effective 8/4/14)
  3. Wegelin & Co. (effective 8/4/14)
  4. Liechtensteinische Landesbank AG (effective 8/4/14)

  5. Zurcher Kantonalbank (effective 8/4/14)
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG (effective 8/4/14)
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates (effective 8/4/14)
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd. (effective 8/4/14)
  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India) (effective 8/4/14)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates (effective 8/4/14)
  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 Compay 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)

Outside of these banks, the norm within the OVDP remains 27.5%. That is far better than prosecution or much bigger civil penalties. Some taxpayers can opt for the easier and less costly Streamlined program. This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.

With roughly 96 Swiss banks taking the DOJ deal and FATCA requiring the entire world to report to the IRS resulting in increasing disclosures, everyone American is eventually going to be discovered.

Banks worldwide want to know if there US clients are compliant with the IRS.

Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.

Do You Have Undeclared Income from a Swiss Bank
 Who Is Handing Over Names to the IRS?
 
Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

IRS Eliminates Appeals Arbitration Program Due To Lack of Demand

September 9, 2015

The Internal Revenue Service has gotten rid of a rarely used program that was supposed to allow taxpayers to expedite the appeals process.

The IRS issued Revenue Procedure 2015-44, announcing the elimination of the Appeals arbitration program. The new revenue procedure obsoletes an earlier revenue procedure that formally established the Appeals arbitration program.


The IRS initially established the Appeals arbitration program as a two-year pilot program in 2000. A taxpayer and the Appeals function could jointly request binding arbitration on any issue that was left unresolved at the conclusion of appeals procedures or unsuccessful attempts to enter into a closing agreement under Section 7121 or a compromise under Section 7122 of the Tax Code. On October 30, 2006, the IRS published Rev. Proc. 2006-44, 2006-2 C.B. 800, which formally established the Appeals arbitration program.

This revenue procedure obsoletes Rev. Proc. 2006-44 and eliminates the Appeals arbitration program. During the fourteen-year period in which arbitration was available, only two cases were settled using arbitration. Given the general lack of demand for arbitration and the fact that its use as a tool to settle disputes without litigation has not proven successful, the IRS is eliminating the arbitration program.

Although Appeals arbitration is being eliminated, taxpayers may be eligible to request mediation for unresolved issues that remain after completion of settlement discussions in Appeals. See Rev. Proc. 2014-63, 2014-53 I.R.B. 1014.

The elimination of the Appeals arbitration program is effective the date the new revenue procedure is published in the Internal Revenue Bulletin, scheduled for Sept. 21, 2015.

Tax Problems?

Need To Appeal?



Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

US BEPS Program Challenges

September 9, 2015

Congressional tax leaders Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways and Means Chairman Paul Ryan (R-Wis.) attacked and specifically targeted four of the fifteen OECD BEPS Actions:

  • Action 13, which would require country-by-country reporting. Such reporting would provide countries with very effective data comparability comparisons though the Masterfile process.
  • Action 4, which would curtail interest deductions;
  • Action 7, which would prevent the artificial avoidance of permanent establishment status;
  • Action 6, which would prevent artificial avoidance of the anti-abuse rules.   
Congressional tax leaders sought to exempt private companies having annual revenues of 750 million Euro or more from the clutches of the BEPS regime. Congressional tax leaders sought to modify BEPS program, ostensibly to make sure that changes would be “beneficial to American workers and job creators.”
 In contrast to the view of the Congressional tax leaders, the American Enterprise Institute scholar Aparna Mathur sought to disparage the entire BEPS program by overstating her assertion that Congressional tax leaders are “right to worry” about the potential impacts of BEPS proposals on American businesses and workers. Dr. Mathur states that tax evasion is minimal – We know better. She is not a CPA, an attorney, has an LLM in tax, or has any professional degree. The studies she cites are antiquated, relying on fact patterns no longer relevant.  In addition, Dr. Mathur confuses an aggregation of related-party transactions, an approach that the OECD approves, with aggregation of all transactions, an approach that the OECD rejects.(Feinschreiber, R. and Kent, M, Transfer Pricing Handbook: Guidance for the OECD Regulations (vol. 5), John Wiley & Sons, Inc., 2012, Chapter 6, pp. 57-68.)  It’s time for BEPS to move ahead.

Blog Post By Robert Feinschreiber, Esq. & Margaret Kent, Esq., Transfer Pricing Consortium.com; [email protected]

Tax Problems?


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Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

Cayman Island Residents Challenge Tax Information Exchange with IRS

September 9, 2015

Two Cayman residents are challenging a decision by the Tax Information Authority to comply with a tax information exchange request by the U.S. Internal Revenue Service.
 

Lee and Sheila Aronfeld are naturalized citizens of the Cayman Islands but remain taxpayers in the United States, where they are subject to a criminal tax investigation, according to the court application.

Their application to file for judicial review claims that the Tax Information Authority was required to notify anyone whose rights would be affected by its decision to comply with the IRS request for information and that the failure to do so had infringed the applicants’ rights to privacy and a fair trial.

On July 22, the Tax information Authority served Cayman companies Tropical Trader Co II Ltd., Sir Turtle Building Co Ltd. and We Five Ltd. with a production notice. The notice did not provide any information about the nature and origin of the underlying tax information exchange request, but it identified the Aronfelds, who are shareholders of the companies, the court application states.

The request sought the production of “all company records including but not limited to all transactions pertaining to [the Aronfelds],” including financial records, account information and other contracts.

The lawsuit claims that the Aronfelds should have been notified and given an opportunity to be heard under the TIA Law “as a matter of fairness.”

The court application claims that recent amendments to the law in 2014 have created a new category of case where a criminal investigation is under way but proceedings have not commenced. In these circumstances, the tax authority is not required to apply to the court or to notify the individuals who are subject to the request.
 
“In eliminating any requirement for notice or judicial oversight in cases of criminal investigations the Section 8(4) Amendments and Section 17 Amendments were unconstitutional as contravening the rights of the Applicants and/or the [the companies that were served with the production notice] under Articles 7 and 9 of the Bill of Rights,” the application states.

The lawyers for the applicants said the production notices were unlawful, and they have asked Cayman’s tax authority for a copy of the tax information exchange request. 

The application for leave to file for judicial review is the latest legal test of Cayman’s tax information exchange framework.

In a judgment released in July following a hearing in April, the Court of Appeal upheld an earlier Cayman Islands Grand Court ruling that the Tax Information Authority had not followed all of its legal obligations before releasing the information to its Australian counterparts, following an application under the relevant Tax Information Exchange Agreement. 

In the initial 2013 judgment, Justice Charles Quin ruled that the Cayman Tax Authority had, among other things, failed to notify the parties subject to the information request and thereby infringed their rights to privacy and a fair and public hearing under the Cayman Islands Bill of Rights.

Need Help With Your
US Reporting Requirements?

 Contact the Tax Lawyers at

Marini & Associates, P.A.  
for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888) 882-9243

 Sources:

Read more at: Tax Times blog

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