By: L. Speyer
A recent Forbes article outlined IRS guidelines for the U.S. government’s offshore account disclosure program, which is now rocking the international financial and banking world. Swiss banks, which are known for their inherent policies of secrecy and confidentiality, have cracked under the pressure of the United States and other foreign countries. Reaching a deal with the U.S. that in the opinion of the author “truly closes the door on bank secrecy and a bygone era of tax evasion.”
Swiss banks and all other foreign financial institutions that have partnered with the IRS must now release information to the IRS on its U.S. taxpaying account holders. Besides providing details on American account holders, banks must also report when money was transferred or accepted into secret accounts, when accounts were closed, and “must reveal all cross-border activities and close the accounts of Americans evading taxes.”
Financial institutions around the world are with their backs against the wall and in a sense are left with little choice but to partner on this mission or suffer penalties at the hands of the U.S. The tide is turning in favor of the IRS. Financial Institutions that do not disclose information have to pay a fine equal to 20% of the top dollar value of all non-disclosed accounts. That goes up to 30% for secret accounts opened after August 1, 2008 but before March 2009. The largest penalties are upwards of 50%.
Currently, the U.S. Department of Justice is investigating 14 Swiss banks and its worldwide branches for criminal activities relating to tax evasion. To help American offshore account holders come forward willingly, the IRS has set up a voluntary disclosure program that grants amnesty in exchange for account information. However, this only applies if an individual comes forward before the IRS opens up an investigation on them. The author concludes that “that disclosure – everywhere and of everything – is inevitable.” U.S. tax payers no longer have anywhere to hide.
As with all tax matters, it is best to consult with a tax professional prior to contacting the IRS . Only an attorney can provide client privilege protection. CPA client privilege is not recognized in Federal court.