The U.S. has seen uninterrupted success in its pursuit of undisclosed offshore accounts held by U.S. taxpayers. It began in 2008 with a key court victory against UBS, which then went on to pay the IRS $780 million. Swiss banking was turned upside down after UBS released thousands of Americans' account information to the IRS. Many other banks did the same, out of fear of prosecution. Recently, Credit Suisse plead guilty and paid a $2.6 billion fine.
Leveraging this momentum, the Justice Department has demanded account information from approximately one hundred Swiss banks that rushed to grab the DOJ's settlement deal before January 1, 2014. The DOJ wants it all: American names, details, and more.
The Swiss banks will face swift prosecution should any of them fail to comply.
Although the terms of the non-prosecution agreement were not available until now, approximately 100 banks accepted the offer. The U.S. settlement deal split the Swiss banks into several categories, with the worst offenders facing more severe penalties.
Category two banks have reason to believe they have violated the law in some way and will be able to avoid prosecution by detailing their mistakes with U.S. clients and paying fines. The draft non-prosecution agreement does not involve criminal penalties or guilty pleas.
All banks are required to report any and all tax-related knowledge to U.S. authorities, as well as close the accounts of Americans evading taxes. While the 3 categories aren't exactly pleasant, they are much better than a full-blown U.S. investigation with potential tax evasion charges.
U.S. account holders who have not already resolved their issues with the IRS should not waste time determining which IRS offshore amnesty program is right for them. With banks being more than willing to comply, disclosure is virtually inevitable.
"Depositors need to be aware that closing a foreign account is not the same thing as coming clean with the IRS," says Catherine Rude, an international tax attorney in Fort Worth, Texas. "Taxpayers that fail to step forward are likely to find themselves up against the vast resources of the IRS and the Department of Justice."
Source: Wood, Robert, "100 Swiss Banks Get Ultimatum Hand Over Americans or Face U.S. Prosecution," Forbes, October 13th, 2014