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U.S. To Expand Offshore Bank Investigations to Singapore and Israel

Offshore Account Update

Posted in on February 26, 2016

Switzerland has long been the location where U.S. investors keep funds offshore because of strong banking privacy laws. With the Swiss Bank Program and the Department of Justice crackdown on Swiss institutions, however, this is no longer the case. The Swiss Bank Program encourages financial institutions with U.S. affiliated accounts to come forward voluntarily if the bank helped facilitate tax evasion.

Banks that report their own involvement, transactions with other financial institutions and details on U.S. accountholders can avoid being criminally prosecuted, as long as they turn over enough details on accountholders and pay a fine.  More than 40 Swiss banks came forward and participated in 2015, and approximately 40 more are expected to participate this year. Participation in the Swiss Bank program is exceeding expectations.

With Swiss banks turning over accountholder details, U.S. investors are looking for other places to move money - and the Department of Justice is also looking beyond investigating Swiss banks. If these banks come forward voluntarily and turn over all their details, the DOJ doesn't need to expend as much effort or use as many resources to track down tax evaders with Swiss accounts.

As a result, the scope of investigations in other countries is expanding. In particular, Bloomberg reports that Israel and Singapore are expected to be prime targets for the DOJ to conduct investigations into financial institutions which may be helping U.S. taxpayers evade IRS reporting requirements.

The DOJ's continued efforts to track down money in foreign banks worldwide is cause for major concern for accountholders. If you have funds offshore that you haven't declared each year, you need to talk with a New Jersey tax attorney to find out what your best course of action is.

Participating in the Offshore Voluntary Disclosure Program (OVDP) can provide amnesty from criminal prosecution and allow you to limit penalties, but OVDP isn't for everyone and you can't partake if you are already under investigation. Your attorney can help you to decide what is best.

DOJ Cracking Down on Foreign Banks in Singapore and Israel

The DOJ's investigations into financial institutions in Singapore and Israel are already underway. Last year, Bank Leumi Le-Israel Ltd. resolved a criminal case brought by the U.S. Justice Department by paying $400 million in penalties.  U.S. agents have also spoken with taxpayers about Singapore money management firms to find out details about how those firms aided in keeping offshore funds secret.

An assistant acting attorney general told Bloomberg that the DOJ is “following leads and following the money,” with lawyers and prosecutors expecting both Singapore and Israel to be prime targets this year.   Other possible locations which could become targets include Hong Kong, Lebanon, Cyprus, and Liechtenstein, although Bloomberg makes clear that “Israeli banks have drawn special focus from the Justice Department.”

The effect of the DOJ's expanded efforts to look into financial institutions worldwide means accountholders will have fewer and fewer places where they can expect privacy.  When banks are charged, they usually give up accountholder details to help themselves. Before the IRS has your information, you should take action to explore your options for minimizing financial penalties. Contact NJ tax lawyer Kevin Thorn today to learn more.


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