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Banks Cooperate with DOJ

Offshore Account Update

Posted on October 9, 2015 |

The Department of Justice and the Internal Revenue Service continue to aggressively pursue legal action against accountholders affiliated with the United States who have undeclared offshore financial accounts. U.S. authorities are also going after banks who helped accountholders avoid their IRS reporting requirements. 

There are amnesty programs for both individuals and banks to avoid criminal prosecution and limit the possibility of penalties. However, amnesty for individuals has become more expensive after August 4, 2014, and participation in the Offshore Voluntary Disclosure Program (OVDP) will now require the payment of a 50 percent penalty to the IRS. 

While this is a substantial financial burden, accountholders may still wish to participate in OVDP because the monetary consequences and criminal penalties can be worse if accountholders are caught with undeclared offshore funds and have not voluntarily disclosed. 

Accountholders should be concerned that more banks are taking advantage of their amnesty opportunity, which is called the Swiss Bank Program. The Swiss Bank Program requires offshore institutions to close accounts of U.S. investors not in compliance with reporting requirements and mandates that the banks turn over detailed account information and cooperate with authorities in identifying investors with undeclared offshore funds. 

A New Jersey tax attorney can provide assistance in determining if you are at risk from your bank turning over your information and can help you consider if participation in OVDP is right for you.

Four Banks Enter the Swiss Bank Program

The DOJ has announced that four banks have entered the Swiss Bank Program. These banks include:

  • Société Générale Private Banking, which had approximately 109 accounts with $139.6 million in assets owned by U.S. accountholders since 2008.
  • MediBank AG, which had 14 accounts with $8.6 million in assets belonging to U.S.-affiliated accountholders.
  • LBBW-Schweiz, which had 35 U.S. accounts with $128,666,130 in assets belonging to people affiliated with the U.S.
  • Scobag Privatbank, which had 13 accounts with $6,945,700 in assets belonging to U.S. affiliated accountholders.

Some of these banks had very few accounts, with relatively small amounts of U.S. assets. Yet, they paid penalties, entered the Swiss Bank Program and agreed to give authorities full details about accountholders. The banks wanted to resolve their liabilities for helping U.S. investors evade taxes and avoid reporting requirements -- but they must sell out their customers to do so.

If you had an account at these banks, authorities may already be investigating your offshore funds and you may find it is too late to participate in the Offshore Voluntary Disclosure Program. Kevin Thorn, a tax attorney in New Jersey, can help you determine if OVDP is still an option.

If you had an account at a different institution, the fact these banks with such few accounts decided to participate in the Swiss Bank Program is disturbing. No financial institution of any size is likely to escape unscathed and you may find your own bank is soon going to turn over your details.  Take action before they do so you do not find yourself facing major financial consequences and possible criminal charges!

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