On October 9, 2015 we posted OVDP Penalty Increased To 50% For 55 Foreign Banks Asset Management Firms! which supplements our earlier post OVDP Penalty Increased To 50% For 50 Foreign Banks! , where we discuss that 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 obligations. 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 obligations; and
- Pay appropriate penalties.
Banks meeting all of the above requirements are eligible for a non-prosecution agreement.
the World where Criminals can Hide Their Money
is Becoming Smaller and Smaller.
Now Bloomberg reports that the flood of information is now giving U.S. investigators intelligence to try to build new cases against individuals and institutions in other countries, said Caroline Ciraolo, the Justice Department’s top tax prosecutor. Financial institutions in Singapore and Israel are possible targets, according to lawyers and prosecutors.
U.S. agents interviewed taxpayers who used a Singapore money management firm to hide assets from the IRS, said Bryan Skarlatos and Scott Michel, lawyers who separately represent some of those Americans. They wouldn’t identify the firm, and Ciraolo wouldn’t discuss it.
Societe Generale SA’s Swiss private banking unit admitted in its settlement that it transferred assets of U.S. customers to “corporate and individual accounts at other banks in Switzerland, Hong Kong, Israel, Lebanon, Liechtenstein and Cyprus,” according to its statement of facts. The unit paid a $17.8 million fine. A bank spokesman declined to comment.
We previously posted the various IRS problems with Israeli Banks:
- " Bank Leumi to Face $300 Million Settlement Option to Close an Investigation Regarding Their Aiding Americans to Evade Taxes"
- on Thursday, September 8, 2011 "More Tax Problems for U.S. Citizens with Foreign Bank Accounts in Israel" and
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on Monday, March 11, 2013 "IRS Targets Israeli Banks and Their US Client;"
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18 held assets in corporations, foundations or trusts in Liechtenstein;
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15 in Panama;
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11 in the British Virgin Islands, and
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4 in Hong Kong.
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.
Read more at: Tax Times blog
