Tuesday, June 17, 2014

Did You Receive a Swiss Bank Letter Asking You to Confirm That You Are Compliant with US Tax Law?

We have numerous clients requested advice on how to respond to letters from their Swiss Bankers asking them to confirm either:
  1. That the account has been declared to the IRS, with evidence of either copies of actual FBAR reports  and/or 
  2. A certification  from a US tax advisor or lawyer  stating that they can has been declared to the IRS and/or
  3. Certification that the account has been disclosed  to the IRS through the  Offshore Voluntary Disclosure Program.
Then they usually further request a release from the client of any  secrecy, confidentiality and/or data protection  under Swiss law.

Don't be fooled into thinking that answering these letters or providing this information will somehow benefit you the client!

Your account will be turned over to the U.S. Treasury Department, as an account associated with a US beneficiary, whether you respond to this banks request or not! 

This is solely for the bank's benefit, so that they can  categorize your account as a "Tax  Compliant Account" which will then not be subject to the 20% penalty imposed by the U.S. Treasury Department against your Swiss Banker.

We originally posted Tuesday, January 28, 2014 "Offshore Swiss Bank Account? This May Be Your Last Chance To File A Voluntary Disclosure!," where we discussed that The United States Justice Department has received 106 requests from Swiss entities to participate in a settlement program aimed at ending a long-running probe of tax-dodging by Americans using Swiss bank accounts according to a senior US official.  The program is open only to banks, who will have to pay between 20 and 50 per cent of the value of undeclared US-owned accounts as at 1 August 2008.

Now on June 2014 Update on the Tax Division’s Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks  was issued by the Doj which provides, among other things:

  • Maximum aggregate dollar value and penalty mitigation (Program II.H.) Part II.H.1 of the program provides that the Swiss bank will pay as a penalty "for U.S. Related Accounts that existed on Aug. 1, 2008, an amount equal to 20% of the maximum aggregate dollar value of all such accounts during the Applicable Period." (Emphasis added.) Similar language is found in II.H.2 and II.H.3. 
  • For each of these three categories of accounts, the "maximum aggregate dollar value" is calculated at a single date (typically using end-of-month information) when the bank’s book of those U.S. Related Accounts is at its highest point. 
  • Additionally, that same date is used for all penalty mitigation calculations, and a reduction in maximum aggregate dollar value will only be permitted for accounts in existence on that date and in the amount that was included in the maximum aggregate dollar value. 
So basically, your Swiss Bank is not interested in advising you that the only reason they need this information is to mitigate their  penalty and  there is no benefit  whatsoever to you for providing information, which they request showing that the account is compliant.

Your account is still  categorized as having a US beneficiary and as such will be turned over to the US Treasury Department pursuant to the Swiss banks agreement.

The only real deadline US taxpayers are currently facing  is the June 30 deadline for filing the 2013 FBAR report on Form 114.

The only other deadline the US taxpayers should consider is the deadline to make a voluntary disclosure in the current Offshore Voluntary Disclosure Program (OVDP), which sets a limit to the penalties imposed on them by the Internal Revenue Service (IRS) for failing to declare foreign assets and earnings.
Once the Swiss banks disclosed an account holder's name to the IRS, which they must do by no later than June 30, 2014the OVDP option is no longer available to that US Taxpayer Account Holder. 

Taxpayers who wish to take advantage of the OVDP 
must act quickly! 

The US Can Use Swiss Data for Law Enforcement Actions!    

The new agreement makes clear that “personal data provided by the Swiss banks… will be used and disclosed only for purposes of law enforcement (which may include regulatory action) in the United States or as otherwise permitted by US law.”
Have Un-Reported Income From a Swiss Bank?

Value Your Freedom?
Contact the Tax Lawyers at
Marini & Associates, P.A.
Before June 30th 
for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882 9243) 

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