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Swiss Banks Trying to Force U.S. Clients to Disclose

Facing billions of dollars in potential fines at the hands of U.S. authorities, Swiss banks are scrambling to convince their American clients to voluntarily disclose their accounts to the IRS.

Long known for its secrecy, Switzerland's banking industry has been turned upside down due to an ongoing U.S. onslaught against offshore tax evasion. In 2013, the Department of Justice announced a program to encourage Swiss banks to cooperate in its ongoing investigation of offshore tax evasion. Under the program, which was made available only to banks that were not already under criminal investigation, the banks would be required to disclose their cross-border banking activities and pay substantial penalties to the United States. Banks that meet all of the requirements are eligible for non-prosecution agreements.

Dozens of Indicted Swiss Bankers Still at Large

As the Department of Justice continues its efforts to prosecute individuals involved in offshore tax evasion, approximately two dozen indicted Swiss bankers remain fugitives in Switzerland.

Although the United States and Switzerland have an extradition treaty, Switzerland will not extradite individuals accused of tax crimes. While these individuals are free to live their normal lives in Switzerland, they risk being arrested and extradited to the United States if they leave Swiss soil. This has already happened to two of the fugitives.

Time limits on tax audits, part 2: responding to a records request

In the first part of this post, we posed the question of how far the IRS can go back into your past when conducting tax audits.

As we noted, the IRS by no means has a blank check to do this. Generally the limitation is three years, or up to six if the IRS identifies a substantial error.

But what if the IRS asks you to voluntarily waive the limitations period because it supposedly needs more information to fully review your returns? In this part of the post, we will discuss how a tax attorney can help resolve situations such as this.

How the IRS can increase your audit window

Tax Day has come and gone, and usually comes the time of the year when people start to worry about their taxes potentially being flagged by the Internal revenue Service. An audit is possible, though the likelihood of such a reality is very low. Still, it is good to be knowledgeable of the subject, and last week we wrote a post about audits and some of the timetables for a person being audited.

But now let's take a look at some of the rules and actions that can cause these time limits to change. First of all, it's important to know that, in general, the IRS has three years to audit your filing. However, that window doesn't trigger until your filing's due date. In other words, filing early -- like, say, in February -- does not mean your "audit window" starts early. It reverts to April 15 if that was your due date.

FATCA to Face Legal Challenge in the United States

The Foreign Account Tax Compliance Act (FATCA), a U.S. law passed in 2010 that requires foreign financial institutions to exchange information with the IRS about American account holders, is set to face challenges in both the courts and in Congress.

Since 2012, the Treasury Department has negotiated Intergovernmental Agreements with approximately 100 countries to implement FATCA. This includes most of the traditional tax havens like Switzerland, Liechtenstein, Panama, and the Cayman Islands.

Swiss Enabler Pleads Guilty

A former Swiss banking executive has pleaded guilty in a Florida court to charges of helping U.S. clients evade taxes. Hansruedi Schumacher, who cooperated with the U.S. government and testified in another prominent offshore prosecution, will face sentencing later this year.

Schumacher, 56, was the Regional Market Manager for UBS's North America International branch from 1990-2002. In 2002, he left UBS to help Neue Zuercher Bank (NZB) start its private banking operations. In doing so, he solicited many of UBS's American clients to transfer their funds from UBS to NZB. He told these clients that NZB was more secure because it did not have a presence in the United States and could not be pressured by U.S. authorities to disclose client information.

Time limits on tax audits, part 1: How far back can the IRS go?

"Don't look back" is a memorable line in literature. It is the title, for example, of a notable documentary from the 1960s about a high-profile British concert tour by the enigmatic singer Bob Dylan.

We may all agree that, in general, it is best to focus on the future. But if you have potentially unresolved tax issues in the past, it is only prudent to be informed about how far back the IRS can look in auditing your returns.

First Bank Reaches Deal as Part of U.S. "Swiss Bank Program"

Swiss bank BSI SA has admitted to helping U.S. clients evade taxes and entered into a non-prosecution agreement with the U.S. Department of Justice, in a deal that requires the bank to pay a $211 million penalty and turn over the names of 3,000 American account holders. They are the first of more than 100 Swiss Banks to officially enter into a non-prosecution agreement.

Since the U.S. started its ongoing clampdown on offshore tax evasion in 2008, several Swiss banks have been prosecuted in the United States. Notable examples include Wegelin & Co., which pleaded guilty to criminal charges and shut its doors in 2013, and Credit Suisse, which pleaded guilty to criminal charges last year.

Two Credit Suisse Bankers Receive Slap on the Wrist at Sentencing

Two former Credit Suisse bankers have received extraordinarily light sentences after pleading guilty and cooperating with the Department of Justice in its case against the Swiss Bank. Josef Dörig and Andreas Bachmann were each sentenced to five years' probation and a fine, sentences that are substantially lower than the recommendations under the Sentencing Guidelines.

While the guidelines provided a range of 70-87 months' imprisonment, defense attorneys asked for leniency based on several factors, including substantial cooperation with the U.S. government, extraordinary acceptance of responsibility, other consequences already suffered as a result of the convictions, and the limited role of the defendants in the overall conspiracy.

Defending against tax fraud charges: don't overplay your hand

If federal authorities accuse you of tax fraud, the steps you and your attorney take in response are crucial.

Given the complexity of the tax code, it is important to get counsel from an experienced tax attorney who knows how to defend and resolve criminal tax charges.