The IRS and the U.S. Department of Justice continue to force foreign banks to disclose accounts held by U.S. citizens and residents. Countries such as Liechtenstein and Switzerland, which in the past vigorously protected the identity of customers, are being forced to disclose accounts of U.S. citizens to the IRS.
Last year, the Justice Department indicted Wegelin & CO. Bank, a private Swiss bank. The government alleged that the Wegelin & CO. Bank was trying to hide 1.2 billion dollars contained in secret accounts as well as the income from those accounts. By this action, the IRS will obtain the identity of Wegelin & CO. Bank's U.S. customers. The end result to the account holders is that they may be subjected to investigation and prosecution, not only for failing to report the foreign accounts by filing yearlyFBARs (IRS Form TD F 90-22.1), but also prosecuted for tax evasion.
As U.S. pressure continues on foreign banks, more and more U.S. citizens and residents will find themselves the subject of criminal investigation when foreign bank accounts are discovered. These vigorous efforts on the part of the U.S. government need not, however, result in catastrophic consequences for those who have offshore bank accounts.
The Offshore Voluntary Disclosure Program (OVDP) not only provides immunity from prosecution for failure to report the offshore accounts, but also provides immunity from prosecution for tax evasion for the willful failure to report the income earned on such offshore accounts. In order to take advantage of the OVDP, an individual must apply prior to the IRS requesting account records from the offshore bank.
We have been able to help those with offshore banking relationships and offshore accounts even in cases where the government has already started its efforts to get account information from the offshore banks. As long as the IRS has not received the individual account holder's information, the fact that there is a pending request to the bank does not bar entry into the offshore program.
Anyone who wishes to have a confidential consultation concerning this matter is welcome to contact us.