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Category Archives: offshore accounts

FBARs Must be Filed by June 30 through the BSA E-Filing System

For 2015, FBARs must be electronically filed by June 30 through the BSA E-Filing System using the electronic FinCEN Form 114, which supersedes the now-obsolete paper Treasury Department Form 90-22.1.
The IRS now has an FBAR Reference Guide on IRS.gov., this Guide is provided to educate and assist U.S. persons who have the obligation to file the FBAR; and for the tax professionals who prepare and electronically file FBAR reports on behalf of their clients. This Guide also supports IRS examiners in their efforts to consistently and fairly administer the FBAR examination and penalty programs.
Who Must File the FBAR?
A United States person must file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year. 
Who is a United States Person?
A "United States person" means: 
  • A citizen or resident of the United States;
  • An entity created or organized in the United States or under the laws of the United States. The term "entity" includes but is not limited to, a corporation, partnership, and limited liability company;
  • A trust formed under the laws of the United States; or
  • An estate formed under the laws of the United States.
Disregarded Entities: Entities that are United States persons and are disregarded for tax purposes may be required to file an FBAR. The federal tax treatment of an entity does not affect the entity’s requirement to file an FBAR. FBARs are required under a Bank Secrecy Act provision of Title 31 and not under any provisions of the Internal Revenue Code.

United States Resident: A United States resident is an alien residing in the United States. To determine if the filer is a resident of the United States, apply the residency tests in 26 U.S.C. § 7701(b). When applying the § 7701(b) residency tests use the following definition of United States: United States includes the States, the District of Columbia, all United States territories and possessions (e.g., American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the United States Virgin Islands), and the Indian lands as defined in the Indian Gaming Regulatory Act.

Example: Matt is a citizen of Argentina. He has been physically present in the United States every day of the last three years. Because Matt is considered a resident by application of the rules under 26 U.S.C. § 7701(b), he is required to file an FBAR.

Example: Kyle is a permanent legal resident of the United States. Kyle is a citizen of the United Kingdom. Under a tax treaty, Kyle is a tax resident of the United Kingdom and elects to be taxed as a resident of the United Kingdom. Kyle is required to file an FBAR. Tax treaties with the United States do not affect FBAR filing obligations.

 Financial Account 
Financial account includes the following types of accounts:
  • Bank accounts such as savings accounts, checking accounts, and time deposits,
  • Securities accounts such as brokerage accounts and securities derivatives or other financial instruments accounts,
  • Commodity futures or options accounts,
  • Insurance policies with a cash value (such as a whole life insurance policy),
  • Mutual funds or similar pooled funds (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions), 
  • Any other accounts maintained in a foreign financial institution or with a person performing the services of a financial institution.
Example: A Canadian Registered Retirement Savings Plan (RRSP), Canadian Tax-Free Savings Account (TFSA), Mexican individual retirement accounts (Fondos para el Retiro) and Mexican Administradoras de Fondos para el Retiro (AFORE) are foreign financial accounts reportable on the FBAR.
Example: Foreign hedge funds and private equity funds are not reportable on the FBAR. The FBAR regulations issued by FinCEN on February 24, 2011 do no require the reporting of these funds at this time.
A financial account is foreign when it is located outside of the United States, which includes the following places:
o United States, including the District of Columbia;
o United States territories and possessions, such as: 
  • Commonwealth Northern Mariana Islands
  • District of Columbia
  • American Samoa
  • Guam
  • Commonwealth of Puerto Rico
  • United States Virgin Islands 
  • Trust Territories of the Pacific Islands 
  • Indian lands as defined in the Indian Gaming Regulatory Act.
Typically, a financial account that is maintained with a financial institution located outside of the United States is a foreign financial account.
Example: An account maintained with a branch of a United States bank that is physically located in Germany is a foreign financial account.
Example: An account maintained with a branch of a French bank that is physically located in Texas is not a foreign financial account.

Example: Ed, a United States citizen, purchased securities of a French company through a securities broker located in New York. Ed is not required to report these securities because he purchased the securities through a financial institution located in the United States. 
Need Help With
  Your FBAR Report?

 Contact the Tax Lawyers at
Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-924

Read more at: Tax Times blog

97 Offshore Banks Are Turning Over Your Names To The IRS – What Are Your Waiting For?

The IRS keeps updating its list of foreign banks which are turning over the names of their US Account Holders, who are now 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 March 9, 2016 the Justice Department Announced that Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd.(CNT) are the 96th & 97th Offshore Banks to reached a resolution under the department’s Offshore Bank Program.
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;
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
  • Pay appropriate penalties.

From at least 2001 through 2011, CNS and CNT, which are both located in Grand Cayman and organized under the laws of the Cayman Islands, assisted certain U.S. taxpayers in evading their U.S. tax obligations to the IRS, and otherwise hiding accounts held at CNS and CNT from the IRS (hereinafter, “undeclared accounts”).  CNS and CNT did so by knowingly opening and maintaining undeclared accounts for U.S. taxpayers at CNS and CNT.  Specifically, and among other things, in furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes:

  • CNS and CNT opened, and/or encouraged many U.S. taxpayer-clients to open, accounts held in the name of sham Caymanian companies and trusts (collectively, “structures”), thereby helping U.S. taxpayers conceal their beneficial ownership of the accounts.
  • CNS and CNT treated these sham Caymanian structures as the account holders and allowed the U.S. beneficial owners of the accounts to trade in U.S. securities.
  • CNS failed to disclose to the IRS the identities of the U.S. beneficial owners who were trading in U.S. securities, in contravention of CNS’s obligations under its Qualified Intermediary Agreement (“QI”) with the IRS.
  • After learning about the investigation of Swiss bank UBS AG (“UBS”), in or about 2008, for assisting U.S. taxpayers to evade their U.S. tax obligations, CNS and CNT continued to knowingly maintain undeclared accounts for U.S. taxpayer-clients, and did not begin to engage in any significant remedial efforts with respect to those accounts until 2011 and 2012.

            The sham Caymanian structures that CNT set up for U.S. taxpayer-clients included trusts, which were nominally controlled by CNT trust officers, but which in fact were controlled by the U.S. taxpayer-clients; managed companies, for which CNT ostensibly provided direction and management services, but which in truth were shell companies that served only to hold the assets of the U.S. taxpayer-clients; and registered office companies, which were shell companies for which CNT simply supplied a Caymanian mailing address.  CNS treated these sham Caymanian structures as the account holders and then permitted the U.S. taxpayer-clients to trade in U.S. securities, without requiring them to submit Form W-9s, which are IRS forms that identify individuals as U.S. taxpayers, as CNS was obligated to do under its QI obligations for accounts held by U.S. persons that held U.S. securities.  CNS and CNT agreed to maintain these structures for U.S. taxpayer-clients after many of them expressed concern that their accounts would be detected by the IRS.

          At their high-water mark in 2009, CNS and CNT had approximately $137 million in assets under management relating to undeclared accounts held by U.S. taxpayer-clients.  From 2001 through 2011, CNS and CNT earned over $3.4 million in gross revenues from the undeclared U.S. taxpayer accounts that they maintained.

         As part of their plea agreements, CNS and CNT have agreed to cooperate fully with the Office’s investigation of the companies’ criminal conduct. 

To date, CNS and CNT have already made substantial efforts to cooperate with that investigation, including by:

  1. facilitating interviews that the Office conducted of CNS and CNT employees, including top level executives;
  2. voluntarily producing documents in response to the Office’s requests;
  3. providing, in response to a treaty request, unredacted client files for approximately 20 percent of the U.S. taxpayer-clients who maintained accounts at CNS and CNT; and
  4. committing to assist in responding to a treaty request that is expected to result in the production of unredacted client files for approximately 90 to 95 percent of the U.S. taxpayer-clients who maintained accounts at CNS and CNT. 

The complete list of Offshore Banks which are turning over the names of their US Account Holders, who are now subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP)is as of 3/9/16: 

  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)
  51. Migros Bank AG (effective 9/25/15)
  52. Graubundner Katonalbank (effective 9/25/15)
  53. BHF-Bank (Schweiz) AG (effective 10/1/15)
  54. Finacor SA (effective 10/6/15)
  55. Schaffhauser Kantonalbank (effective 10/8/15)
  56. BBVA Suiza S.A. (effective 10/16/15)
  57. Piguet Galland & Cie SA (effective 10/23/15)
  58. Luzerner Kantonalbank AG (effective 10/29/15)
  59. Habib Bank AG Zurich (effective 10/29/15)
  60. Banque Heritage SA (effective 10/29/15)
  61. Hyposwiss Private Bank Genève S.A. (effective 10/29/15)
  62. Banque Bonhôte & Cie SA (effective 11/3/15)
  63. Banque Internationale a Luxembourg (Suisse) SA (effective 11/12/15)
  64. Zuger Kantonalbank (effective 11/12/15)
  65. Standard Chartered Bank (Switzerland) SA, en liquidation (effective 11/13/15)
  66. Maerki Baumann & Co. AG (effective 11/17/15)
  67. BNP Paribas (Suisse) SA (effective 11/19/15)
  68. KBL (Switzerland) Ltd. (effective 11/19/15)
  69. Bank CIC (Switzerland) Ltd. (effective 11/19/15)
  70. Privatbank IHAG Zürich AG (effective 11/24/15)
  71. Deutsche Bank (Suisse) SA (effective 11/24/15)
  72. EFG Bank AG (effective 12/3/15)
  73. EFG Bank European Financial Group SA, Geneva (effective 12/3/15)
  74. Aargauische Kantonalbank (effective 12/8/15)
  75. Cornèr Banca SA (effective 12/10/15)
  76. Bank Coop AG (effective 12/10/15)
  77. Crédit Agricole (Suisse) SA (effective 12/15/15)
  78. Dreyfus Sons & Co Ltd, Banquiers (effective 12/15/15)
  79. Baumann & Cie, Banquiers (effective 12/15/15)
  80. Bordier & Cie Switzerland (effective 12/17/15)
  81. PBZ Verwaltungs AG (effective 12/17/15)
  82. PostFinance AG (effective 12/17/15)
  83. Edmond de Rothschild (Suisse) SA (effective 12/18/15)
  84. Edmond de Rothschild (Lugano) SA (effective 12/18/15)
  85. Bank J. Safra Sarasin AG (effective 12/23/15)
  86. Coutts & Co Ltd (effective 12/23/15)
  87. Gonet & Cie (effective 12/23/15)
  88. Banque Cantonal du Valais (effective 12/23/15)
  89. Banque Cantonale Vaudoise (effective 12/23/15)
  90. Bank Lombard Odier & Co Ltd (effective 12/31/15)
  91. DZ Privatbank (Schweiz) AG (effective 12/31/15)
  92. Union Bancaire Privée , USP SA (effective 1/6/16)
  93. PHZ Privat - und Handelsbank Zürich AG reorganized as Leodan Privatbank AG (effective 1/25/16)
  94. Hyposwiss Privatbank AG reorganized as HSZH Verwaltungs AG (effective 1/27/16)
  95. Bank Julius Baer & Co., Ltd (effective 2/4/16)
  96. Cayman National Securities Ltd. (effective 3/9/16)
  97. Cayman National Trust Co. Ltd. (effective 3/9/16)
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, including taxpayers with accounts at one of the 97 Swiss Banks listed abover 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.
  1. With roughly 97 Swiss banks taking the DOJ deal and 
  2. FATCA requiring the entire world to report to the IRS
it is inevitable that this increased disclosure, will result in Every American eventually being 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 one of 
these Offshore Banks or

 Management Companies?
Is Your Name Being Handed Over 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
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

Offshore Banks Liability For Client's Tax Evasion

According to Law360 Offshore Tax Havens and Nominee Entities pose a significant regulatory and compliance risks to international financial institutions.

Regulatory authorities around the world, including the U.S. Department of Justice, intensified their investigations into offshore tax havens after the April 3, 2016, publication of names associated with the Panamanian law firm Mossack Fonseca, widely known as the “Panama Papers,” and the firestorm of public outcry.

International financial institutions frequently open accounts in the name of offshore entities. In order to combat the risks of facilitating tax evasion, most financial institutions apply rigorous “know your client” and new client adoption procedures. Even with these processes in place, financial institutions retain limited insight into a client’s true intentions.

While account opening documentation usually includes language admonishing that the account holder solely is responsible for the tax compliance of the assets held in the account, the trend in international enforcement is to question the sufficiency of such clauses.

Regulatory regimes such as the U.S. FATCA and the Organization for Economic Cooperation and Development’s Common Reporting Standard require financial institutions to report information on their account holders to tax authorities. Institutions that fail to implement the reporting schemes carefully and thoroughly face significant automatic withholding of payments from source jurisdictions and potential loss of access to dollar markets.

Financial institutions no longer can afford simply to delegate responsibility for tax compliance of accounts they hold for their clients. Banks and financial institutions that preemptively conduct rigorous risk assessments of offshore entity accounts and implement stricter compliance and oversight measures will be the best prepared to answer when the DOJ or another regulatory authority comes calling.

Does Your Financial Institution Have U.S. Taxpayers
With "Unreported Income" From Offshore Accounts?

Do You Need Them Come Clean NOW before
Their Illegal Activity is Identified! 

 We Can Counsel Them
on Which OVDP Program
is Right for Them?

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

The Saga of the “Panama Papers” Has Only Just Begun!

Well the world has been abuzz as a result of the leaked information from Panamanian Law Firm Mossack Fonseca in April of this year.

It appears, at least to me, that hopefully the original informant “John Doe” has cut some type of deal for immunity, with the various interested countries around the world.

The basis for my conclusion is based upon the following timeline of events from the time that the leak was revealed, until yesterday's release ofleaked information by the ICIJ: 
·         On April 4, 2016, we posted Huge Leak From the Panamanian Law Firm Mossack Fonseca! where we discussed that the offshore planning world was set on fire this weekend with the news that 11 million documents were leaked from the Panamanian law firm Mossack Fonseca.

·        On April 18, 2016 we posted Have An Un-Reported Account Associated With Mossack Fonseca? Like Your Freedom? Call Us!  where we discussed that U.S. federal agents and prosecutors told NBC News earlier that they had begun to mobilize in an effort to obtain and use the Panama Papers to bolster Existing Criminal Investigations and Prosecutions and to Launch New One.

o    Now The Guardian reports that U.S. Attorney Preet Bharara has “led several crusades against criminal wrongdoing in the financial sector, is already investigating several of the more than 200 US citizensnamed in the papers.”

o   The ICIJ received an email, published by the Guardian, from U.S. Attorney Preet Bharara for the Southern District of New York indicating that his office had “opened a criminal investigation regarding matters to which the Panama papers are relevant.
·         On April 26, 2016 The International Consortium of Investigative Journalists announced that it will release on May 9 a searchable database with information on more than 200,000 offshore entities that are part of the Panama Papers investigation.

o   ICIJ says it will not release clients' personal data en masse, and the data published in the searchable database will not include records of bank accounts and financial transactions, correspondence, passports or telephone numbers.

o   Nor will unpublished data be passed to national tax authorities or prosecutors, says ICIJ. Its director Gerard Ryle claims the organization is a 'media organization shielded by the First Amendment of the US Constitution and other legal protections from becoming an arm of law enforcement'. It has already used the First Amendment argument to resist demands from the US Attorney's office, however this argument may not hold against other jurisdictions that seek disclosure orders against ICIJ.

·       On May 6, 2016 According to New York Times the anonymous source that leaked Mossack Fonseca's client documents to the newspaper Sueddeutsche Zeitung has offered to cooperate with law enforcement agencies 'in prosecutions related to offshore money laundering and tax evasion' if they are assured personal immunity.

·         Also on May 6, 2016 the International Consortium of Investigative Journalists announced that the unknown source behind a leak of 11.5 million financial and legal documents regarding shell companies from the Panamanian law firm Mossack Fonseca has offered to provide the same documents to governments that he gave to a team of reporters. 

o   The offer of cooperation came in the form of an 1,800 word manifestoblasting lawyers, tax evasion, weak lawmakers and income inequality. In it, the leaker, “John Doe” whose identity is said to remain unknown even to the journalists he communicates with, said he is worried about weak protections for whistleblowers, and called on Congress and other global lawmakers to make it easier for people like him to get immunity.

“Thousands of prosecutions could stem from the Panama Papers, if only law enforcement could access and evaluate the actual documents,” the statement said.
 “ICIJ and its partner publications have rightly stated that they will not provide them to law enforcement agencies.
I, however, would be willing to cooperate with law enforcement to the extent that I am able.”

Although thousands of news stories have been published since early April, the actual document cachehas been off-limits to tax authorities until yesterday. The ICIJ released a searchable databaseof the names of 214,000 companies created by Mossack Fonseca and people tied to them on May 9, 2016 but it has said it won’t cooperate with investigators, who have only had access to the documents that the journalists have made public. The source’s statement could change that.

The database published on May 9, 2016, is only a "fraction"of the total dump of files, according to the ICIJ.
The release comes at a fortuitous time for regulators, as the DOJ has doubled the number of prosecutors in its FCPA unit, the FBI has organized three squads of agents to target foreign corruption and the IRS Has Added 600-700 Enforcement Agents To Catch "International Tax Cheats".


Do You Have Undeclared Income 
From A Foreign Entity
Formed By Mossack Fonseca ?

Do You Have Undeclared Accounts
With Any of the Following Foreign Banks?
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

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





Read more at: Tax Times blog

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