Within the past few months, banks in Switzerland (and elsewhere), or the banks’ lawyers, have sent a flood of letters to their current and former U.S. clients. The letters advise the clients about the US-Switzerland Agreement (which we wrote about here), announced last August, whereby the banks will report once-“secret” account information to DOJ, which may then use that information for tax investigations and prosecutions. The letters then request that the clients write back, and tell the bank whether the clients have already sent in all their FBARs. If not, the letter directs the clients to the IRS Offshore Voluntary Disclosure Program (OVDP). Many of the letters also request that the clients sign and return IRS Form W-9. Many of the letters also request that the clients waive any banking secrecy laws (the very laws that may have tempted the client to open the account in the first place). We have also seen such letters from banks elsewhere, including Israel.
The letters, however, do not advise that the penalty that the bank will pay to DOJ under the bank’s settlement agreement with DOJ will be reduced by the value of accounts that have come into US tax compliance. In other words, if the bank’s US client made a voluntary disclosure of the account(s), then that account(s) will be removed from the calculation of the bank’s penalty to DOJ. The banks thus have an obvious financial interest in their clients reporting their accounts to the IRS.
If you have received a letter from a Swiss bank, and you have non-compliant foreign assets, you don’t have much time before the US government will have your information. At that point, any amnesty opportunity to come forward, pay taxes and penalties and avoid an IRS investigation and prosecution, will be forever closed.
If you have received such a letter, we can advise you. We can discuss your risks and your options. Contact us for a confidential consultation.