Bank Data Exchanges Between the Swiss and U.S. Governments: It Could Soon Be Done AutomaticallyOffshore Account Update
Posted on January 20, 2017 | Share
If you have offshore funds at a Swiss bank account, the United States government wants to know about your account and about the money within it. You must file an annual Report of Foreign Bank and Financial Accounts (FBAR) and could face serious penalties if you don't, especially if the IRS believes you willfully failed to disclose your offshore account.
If you do not tell the U.S. government about your account, they have ways of obtaining the information. Currently, there are some practical limitations to the process used by the U.S. government to find out about offshore Swiss accounts. Starting in 2017, however, the U.S. government may be automatically given information about U.S. affiliated individuals with Swiss accounts.
As it gets easier for U.S. authorities to find out details about offshore Swiss accounts, the chances of you being able to hide your account are going to get slimmer and slimmer. If the U.S. government and the Swiss government enter into an agreement as expected in 2017, there will be no chance at all that you can keep your account secret.
You need to find out what options you have, and what your obligations are regarding reporting your offshore account to U.S. authorities. Contact a New Jersey international tax attorney as soon as you can to get advice on what you can do about your Swiss bank account.
The Automatic Exchange of Bank Information
Currently, if the U.S. wants to find out about offshore accounts, the U.S. government has to make a request for the information. The U.S. and Switzerland signed a Model 2 Intergovernmental agreement allowing for information to be exchanged upon consent of accountholders or if group requests are made.
The U.S. has also used a program called the Swiss Bank Program to encourage banks in Switzerland to come forward and report on accountholders. Banks which could face criminal charges for helping to facilitate the evasion of U.S. taxes have been coming forward and participating in the Swiss Bank program so they can get amnesty from prosecution by paying a fine and giving up accountholder details.
Although the information the U.S. can obtain through its current methods has led to many accountholders being fined, facing civil penalties, and even facing criminal prosecutions, there are limits on when and how the U.S. can get information. Unless a bank agrees to an amnesty deal or the U.S. makes a specific request, taxing authorities in the United States won't get your info.
However, this is likely to change in 2017. The Secretariat's deputy head of tax in Switzerland stated recently that Switzerland and the United states are expected to reach an agreement in 2017 in which the automatic reciprocal exchange of information occurs. In other words, if someone affiliated with the U.S. has a Swiss bank account, the info will automatically be sent to U.S. taxing authorities.
This means U.S. authorities are going to have details about every accountholder with an offshore account right at their fingertips. You should talk with international tax attorney Kevin Thorn about what this could mean for you so you can protect yourself from penalties if you have offshore funds.