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The Role of the Attorney in the Voluntary Disclosure Process

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The Role of the Attorney in the Voluntary Disclosure Process
by Asher Rubinstein, Esq.

Many people wonder if they need an attorney to represent them in connection with a voluntary disclosure to the IRS. They wonder if they can, or should, make a disclosure to the IRS themselves. Perhaps they believe that the process is simple: contact the IRS, tell the IRS about the account, pay some back taxes and they’re done. Other people reason that if the IRS is going to impose a penalty based on a percentage of the value of the foreign account, and the penalty will apply whether or not the taxpayer is represented by legal counsel, then why go through the additional expense of paying a lawyer?

There are various reasons why representation by an attorney is important in making a voluntary disclosure.

First and foremost, a non-compliant foreign account can have criminal consequences. For that reason alone, representation by legal counsel is important in order to minimize the criminal implications.

The lawyer should first gather the facts related to the foreign account: at what bank, in what country? What is the source of funds in the account? Is there an entity involved, such as a foreign trust, corporation or foundation? Has the client received communication that the foreign account is being disclosed? Has the bank requested the client to sign a W-9? Were illegal funds deposited into the account? Was money laundering involved? These questions and others will frame the possibilities of discovery of the account, help determine whether the client will or will not be accepted into the Voluntary Disclosure Program and what are the risks of criminal prosecution. The lawyer should assess the risk of criminal consequences, or whether the implications are confined to the civil realm. If anything, this initial assessment could, at a minimum, comfort the client that he or she may not be going to jail.

The lawyer should also provide the client with a roadmap of possible courses of action with respect to the offshore account. For instance, what happens if the client doesn’t disclose the account? What are the possibilities of IRS discovery of the account, and what would be the consequences in that event?

One possible course of action might be to convert the foreign account into a tax-compliant structure. The attorney may counsel the client with regard to transforming a non-compliant offshore account into one that complies with current US law. Although the attorney cannot erase a noncompliant past, the attorney can ensure compliance going forward. Converting a non-compliant foreign account into a compliant structure is often done in tandem with a voluntary disclosure. In other words, make amends for past non-compliance, and ensure ongoing future compliance.

The attorney should also explore the possibility of filing the proper reporting documents (e.g., the FBAR forms), while not formally applying for the voluntary disclosure program. This avenue may be appropriate, for example, for accounts that did not earn US taxable income and only earned de minimis income, or for clients who did not own a foreign account but had signatory authority over the account of a family member. If no US tax returns need to be amended, penalties may be entirely avoided. Such determination requires the expertise of experienced tax attorneys.

All of these possible courses of action will vary depending on the client’s specific situation. Clients and their foreign accounts all have different histories and family situations. The nature of the client’s strategy will of course depend on the client’s unique facts and circumstances, and the attorney is the proper advisor to assess the background and the facts and recommend how to proceed.

In one case that we handled, a US client inherited a complex web of foreign corporations owned by foreign trusts established by a non-US parent. As attorneys, we had to first untangle issues of international corporate taxation and liaise with the foreign trustees before giving our US client proper guidance on how to proceed.

We’ve also seen many instances of foreign accounts established by parents who are deceased. We’ve thus had to address issues of estate taxation and probate in order to properly guide the clients on foreign account compliance. We represented a brother who was in litigation with his sister over their inheritance. The parents had foreign accounts, and we were called upon to advise regarding inheritance of the accounts and making them compliant, within the context of the siblings’ litigation.

One client had a foreign account, but was in the midst of a bitter divorce. This led to issues of whether the foreign account might be marital property, as well as strategic issues of disclosure of the account in the context of a contest over the couple’s assets.

Many foreign account matters also involve foreign taxation issues. In one case, a client had to decide whether to disclose an account to the IRS or to the German tax authorities, or both, and we addressed the application of international tax treaties to the income earned in the account.

Thus, the role of the attorney often involves not only the client’s unique situation, but also the intersection of other areas of law: domestic and international taxation, corporate, marital, family, estate, and international law, among others. While addressing the client’s micro issues, the lawyer must also consider a broader, more global context.

Of course, closer to home, representing the client before the IRS is the threshold concern, and the attorney becomes the client’s advocate for the essential purpose of becoming tax compliant and avoiding criminal consequences. Even if a client will ultimately avoid criminal prosecution by making a voluntary disclosure, the client must still pass the Criminal Investigations Division (CID) of the IRS. A CID agent will be assigned to the client’s matter, and this agent will require specific information about the client, the account, the source of funds and other details. A qualified lawyer will assist the client in answering these questions and passing the CID investigation.

Legal counsel is necessary in interaction with the IRS in order to protect the client from making incriminating statements, or giving the IRS documents that may be prejudicial. Someone representing himself may reveal too much to the IRS, and should have the benefit of legal counsel to determine what to say, how and when to say it, what not to say, what documents to give the IRS, etc.

In many cases, the role of the attorney is to identify and respond to hidden dangers. We represented a family who left their home country after a military coup, and feared religious persecution. The family placed their family savings in a Swiss account not to hide funds from taxation, but because of reasons of safety and stability. When we noticed that a sister’s name was on the account years ago, we had to address the issue of the brother disclosing the account to the IRS, but the sister not wanting to join in disclosing. The brother’s disclosure alone would have pointed the IRS directly at the sister. We counseled the family in their difficult choice of brother and sister both coming forward, or neither coming forward and both assuming certain risks.

Attorneys also have experience in dealing with the IRS and with IRS procedures. Experienced attorneys may have pre-existing, professional relationships with IRS agents, which may benefit the client. A good tax lawyer is well versed in the administrative mechanisms of the IRS, and how to navigate the bureaucracy, saving the client time and aggravation.

A good attorney works to obtain the best results for the client. Thus, the attorney should serve the client’s interests by framing the facts in the best light possible for the client. The attorney will advance arguments in favor of the client’s interests, pointing out the positive and minimizing the negative, in order to arrive at the best results possible for the client. While IRS agents may not have much discretion in assessing penalties, a good attorney will argue on behalf of the client in order to achieve the best results possible. In the event that the client is unhappy with the IRS agent’s assessment of penalties, the attorney can advise regarding appeal procedures and challenging the IRS determination.

Thus, the role of the attorney in a voluntary disclosure is multi-faceted. We minimize the criminal implications. We are family advisors. We bring non-compliant foreign accounts into tax compliance. We identify issues and give clarity where multiple areas of domestic and international law intersect. We advance the client’s interests before the IRS and guide the client through the administrative, bureaucratic process as smoothly as possible. Yes, at the end of the process, the client may pay the same back taxes, interest and penalties as if the client was not represented by counsel. However, along the way, the client benefits from the lawyer’s mitigation of criminal consequences, identification and response to unseen dangers and risks, legal analysis, strategic guidance and experience with the IRS.

Jail Sentence for Investment Advisor with Unreported UBS Account

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Jail Sentence for Investment Advisor with Unreported UBS Account

An investment advisor was sentenced to one year in jail and six months house arrest for failing to report his foreign accounts at UBS. His name was one of the 250 names of account holders that UBS gave to the IRS when UBS settled allegations of aiding and abetting tax fraud. (Another 4,500 names are in the process of being transferred to the IRS.) The accounts were held in the names of Panamanian and British Virgin Islands corporations. As we’ve noted earlier, although the IRS has targeted accounts owned in the names of offshore entities like corporations and foundations, non-compliant accounts in individual names are targeted also. As part of the criminal sentence, the judge imposed a penalty of $4.4 million, representing 50% of the value of the foreign accounts.

We continue to represent people interested in bringing their foreign accounts into tax compliance. Through the IRS voluntary disclosure program, clients can avoid criminal prosecution by paying their back taxes and penalties. The IRS will welcome a voluntary disclosure provided that the funds in the foreign account are not criminally derived, the IRS is not already investigating the account owner and does not already know about the foreign account. If these pre-requisites are met, the foreign account can be made tax compliant, criminal prosecution can be avoided and the client can sleep at night. However, timing is crucial: come see us before the IRS sees you.

What’s New with Foreign Bank Accounts and Voluntary Disclosures?

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What’s New with Foreign Bank Accounts and Voluntary Disclosures?
by Asher Rubinstein, Esq.

With regard to the UBS matter, the SFTA (Swiss Federal Tax Authority) continues to transmit once-“secret” banking files to the IRS, as per the UBS settlement agreement.  Americans whose UBS accounts are being revealed to the IRS and who have not already come forward and voluntarily disclosed their accounts can expect to be on the receiving end of an IRS investigation or subpoena and should consult with a tax attorney.  Americans with accounts at foreign banks other than UBS must consider that the IRS is now targeting other banks, including but not limited to Credit Suisse, HSBC and Julius Baer, and these account holders must give thought to cleaning up non-compliant accounts before the IRS discovers the accounts.

Now that the UBS settlement is finalized (i.e., approved by the Swiss Parliament) and the transfer of account information to the IRS is proceeding, the IRS is analyzing the account information that it is receiving, launching investigations against account holders, and prosecuting account holders for not reporting the accounts and not paying taxes on income earned in those accounts.  The IRS is also moving past UBS and investigating other banks, in other countries.  India is one target of investigation.  We also understand that the IRS is focusing on accounts in Israel.  We are getting many calls from people with accounts in India and Israel, and also Hong Kong and Singapore, who are looking to put their banking affairs in order.

Also important are the subtle but significant changes in IRS voluntary disclosure practice.  First, there are rumors that voluntary disclosures made after June 18, when the Swiss Parliament approved the UBS settlement, will not be accepted.  The theory is that once the Swiss Parliament approved the settlement, disclosures are not sufficiently voluntary.  In practice, however, we are still representing numerous clients who are still coming forward and making disclosures after June 18, and their disclosures are not being rejected.

Second, the “pre-clearance” process of the voluntary disclosure (whereby the IRS lets us know whether the IRS already has the name of the account holder, which would render the disclosure too late), has also changed, slightly but significantly.  In the past, to request pre-clearance, we would only have to provide the individual’s name, address, social security number and date of birth.  This is sufficient information whereby the IRS could tell us whether it already had knowledge of the individual, in which case pre-clearance would come back denied, or whether the individual was pre-cleared to continue the voluntary disclosure.  Now, however, the IRS is asking for the name of the foreign bank in order to process the pre-clearance.  The name of the bank is potentially incriminating information.  If pre-clearance is denied, then the IRS already has the person’s name, plus the foreign bank, which makes investigation and prosecution easier for the IRS.  The IRS has changed its procedure to require incriminating information in advance of any indication of acceptance into the voluntary disclosure program.  This could have a chilling effect on future voluntary disclosures, because people will not be handing over incriminating information without the slightest indication of whether they will be accepted by the IRS.  However, if the individual is not concerned with being rejected from the program (for example, the foreign funds are not illegal source funds), then it may still make sense to provide the bank information and proceed with the disclosure.  The benefit of disclosure – lower penalties and avoidance of criminal prosecution – may outweigh the provision of potentially incriminating information, especially when there is little risk of non-acceptance into the voluntary disclosure program.

We can assist foreign account holders in addressing such risks, navigating the changing rules and procedures of the voluntary disclosure program, and cleaning up non-compliant foreign accounts.

Update: Prosecution of Americans with Foreign UBS Accounts, and What’s Next for US Clients at Other Foreign Banks.

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Update: Prosecution of Americans with Foreign UBS Accounts, and What’s Next for US Clients at Other Foreign Banks.

The following is a question-and-answer between a Swiss journalist and Asher Rubinstein:

Does the speed and vigor of the IRS/Department of Justice legal proceedings meet with your expectations?

I don’t think that the IRS/DOJ are being “speedy”. For instance, since UBS provided the initial 250-300 names of Americans, back in early 2009 when the UBS settlements were first announced, there have been twenty or fewer prosecutions to date.  I believe that the IRS is being thorough in its investigations and bringing charges once the evidence is in place and the case is strong.  As for “vigor”, yes, I do believe that the IRS is, and has been, pursuing Americans with non-compliant foreign accounts with absolute vigor.  Even in cases where the taxpayer has cooperated with the prosecution, the IRS has asked for significant penalties and jail time, rather than token sentences.

Are these UBS clients being so publicly dealt with to send out a signal to clients of other banks?

Yes. The IRS is sending a message that it is being vigilant and aggressive in its pursuit of Americans with non-compliant offshore accounts.  The IRS does not want American taxpayers and foreign bankers to think that it is easing its campaign now that the UBS matter is almost over.  Rather, the IRS is now investigating other banks in other jurisdictions.  The IRS wants foreign banks and financial institutions to cease providing non-compliant accounts and strategies for tax fraud.  At the same time, the IRS wants to scare Americans to come forward and voluntarily disclose their foreign accounts, which will save the IRS significant resources in investigating and then litigating against the account holder.

Would you expect the same pace of convictions to continue as the whole 4,450 UBS names are handed over during the course of time?

Yes, the investigations, prosecutions and guilty pleas will indeed continue.  If a person on the list of 4,450 names has made a voluntary disclosure to the IRS before his or her name is handed over, then that person can take some degree of comfort that a criminal prosecution will likely not ensue, and penalties will be capped.  On the other hand, if a person on the list did not come to the IRS before the release of his or her name, then that person can expect a subpoena and should be thinking about consulting a criminal tax lawyer.

How will the US Department of Justice pursue Swiss-based lawyers/tax advisors it feels have aided and abetted US tax evasion?  Can these people be brought from Switzerland to stand in US courts?

Charges are brought in the US against foreign nationals not located in the US.  This makes it very difficult to actually bring the defendants to trial in the US.  The mechanism would be via the extradition process, and we have very recently seen a well-publicized extradition request for Roman Polanski denied by the Swiss. The issue also opens the diplomatic rather than merely judicial process, with the attendant complexities of the diplomatic realm.  But one thing is certain: the Swiss bankers and lawyers will probably be avoiding traveling to the IRS out of fear of arrest.

Is there any slack being cut UBS tax cheats in regards to plea bargaining etc – or is it too late for these people?

There is little slack being shown by the IRS.  Even in cases where a taxpayer cooperates and  gives the IRS names of bankers, lawyer and even other taxpayers, the IRS is still asking for significant penalties and jail terms.  The courts, however, are showing some degree of leniency when defendants cooperate.  Out of ten prosecutions of UBS clients, seven have avoided jail terms.  The IRS requested jail terms, but the court rewarded the defendants’ cooperation.  While the defendants may have avoided jail in some cases, they have been sentenced to house arrest, probation, restitution and significant monetary fines and penalties.

The key for Americans with foreign accounts is to avoid a criminal prosecution for tax fraud.  The way to avoid a criminal prosecution is to come forward with a voluntary disclosure before the IRS gets the name of the taxpayer.  A timely voluntary disclosure avoids criminal prosecution and lessens the penalties.

After UBS Deal, Does Offshore Banking Have a Future?

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Asher Rubinstein’s article, “After UBS Deal, Does Offshore Banking Have a Future?” was published on Forbes.com.  Please click here to view the article on Forbes.com.

After UBS Deal, Does Offshore Banking Have A Future?

Swiss-account holders will still get stability, privacy and protection from private parties—but not from the IRS.
Asher Rubinstein 06.17.10, 4:45 PM ET

In Zurich this week, the talk of the town is the Swiss Parliament’s vote to approve the settlement by which UBS banking files will be handed over to the IRS. People are questioning whether the erosion of Swiss banking secrecy will lead to a decline in the prestige of Swiss banking overall.

Now that the UBS matter appears to be heading toward resolution, another question is whether charges will be filed against other banks, in Switzerland or elsewhere, for facilitating tax fraud by hiding income in accounts once thought to be impervious to tax authorities, but now shown to be vulnerable.

The Swiss Parliament’s vote to approve the UBS settlement was expected. Most Swiss bankers and lawyers understood that UBS files would be surrendered to the IRS, because the results of refusing to disclose the bank data would likely have been the Department of Justice re-instituting further civil and criminal actions against UBS in federal court in Miami.

The Department of Justice, which prosecuted on behalf of the IRS, would likely have argued that UBS was in contempt of court and violated the settlement agreement. The penalties might have included revocation of UBS’ lucrative banking license in the U.S., and seizure of UBS’ billions of dollars of assets in the U.S. The consequences would have been devastating to UBS, its account holders and the broader financial markets.

But still, the world–and especially some Americans with Swiss accounts they thought were “secret”–waited for Parliament to act. Delays in Parliament were caused by political maneuvering and the tacking on of special interest provisions to this must-pass legislation (just as happens in the U.S. Congress), but everyone expected the UBS settlement to be approved eventually because of the potential downside if it were rejected.

Now that it has passed, one question is whether Parliament’s approval is good for Switzerland. Many Swiss people do not think so. For one thing, the Swiss are historically and proudly independent, and many were not pleased at having to back down to the U.S. Many Swiss people were prepared to sacrifice UBS for its misdeeds, in return for Swiss sovereignty standing firm and Swiss banking secrecy laws left intact.

Had Parliament not voted in the affirmative, the debates may have extended to a referendum among the Swiss population. The Swiss populace may well have rejected the settlement, standing up against the U.S. and in favor of longstanding Swiss banking secrecy which has, until recently, served Switzerland so well.

Switzerland has for decades benefited from being the premier banking nation in the world, the country where everyone from other countries–business oligarchs, shady dictators and retirees alike–put their money. Switzerland has much of the world’s wealth in its vaults, under its management and earning huge fees for its banks. Switzerland, and the Swiss, have grown rich as the bankers of the world.

Will this notion of elite Swiss banking change because of Parliament’s vote and the defeat of Swiss banking secrecy? Probably not. What has changed is the reason for banking in Switzerland. Tax evasion by hiding income in Swiss accounts is no longer a viable reason. Yet the political, social and economic stability of Switzerland are all still intact. And notwithstanding Parliament’s vote, Swiss banking confidentiality is also still intact, so long as the account is tax-compliant. Confidentiality from one’s private creditors and other financial challengers remains. Switzerland will continue to be a strong banking and financial services center, even a confidential one, albeit a tax-compliant one.

While the IRS offensive against UBS may have been the first significant dent to Swiss banking secrecy, other recent events have demonstrated that banking secrecy vis-a-vis governmental tax authorities is no more, whether in Switzerland or elsewhere. For instance, all the “tax haven” countries, including Liechtenstein and Monaco, along with Switzerland, have signed Tax Information Exchange Agreements with the U.S. and other countries. The tax havens have also agreed to abide by banking transparency standards and bank information sharing standards set forth by the OECD, the Organisation for Economic Co-operation and Development, a transnational quasi-governmental organization supported by the European economic powers and the U.S.

Moreover, information sharing and cooperation among governments is now routine, as seen by Germany paying millions of Euros for stolen bank data, using that data to prosecute German tax evaders, and then sharing that data with multiple other foreign governments.

The HIRE Act, recently passed by the U.S. Congress, sets very rigid rules requiring Americans to disclose offshore accounts and foreign entities, and punishes noncompliance with very severe penalties.

It is not illegal to have a foreign bank account, and there are many good reasons for having one: asset protection, access to foreign investment products, international diversification, doing business globally, owning real estate in a foreign country. But the disclosure and tax reporting obligations are now stringent. While banking privacy and asset protection from private civil creditors may be ongoing, there can be no expectation of banking secrecy in the context of tax reporting and disclosure.

As UBS surrenders its client data to the IRS, we can expect the IRS to set its sights against other banks. The 15,000 U.S. taxpayers who have already made voluntary disclosure to the IRS about their foreign accounts, and the U.S. taxpayers who were indicted for tax fraud and have been cooperating, have provided the IRS with a wealth of information about other banks, in Switzerland and other countries, that have aided and facilitated tax noncompliance. It is unlikely that the IRS will stop with UBS, but will use this public relations victory as leverage to pursue other banks in Switzerland and elsewhere.

The bottom line for foreign accounts once thought to be secret: they’re not. Account holders must bring their accounts, wherever located, into compliance. Switzerland and other foreign banking centers offer safety and stability, but they no longer offer tax secrecy.

Asher Rubinstein is a partner in the law firm of Rubinstein & Rubinstein, LLP, in New York. His practice is devoted to domestic and offshore asset protection, wealth preservation and tax planning. He may be reached via www.assetlawyer.com

Update from Switzerland: Time Running out for UBS Accountholders

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Update from Switzerland: Time Running out for UBS Accountholders
by Asher Rubinstein, Esq.

I landed in Zurich a few days ago, en route to speaking at an Asset Protection conference in neighboring Liechtenstein. My presence in Zurich coincided with the Swiss Parliament’s rejection of legislation that would have approved the UBS settlement agreement with the IRS. The Parliament vote was the talk of Zurich when I landed. I met with many Swiss bankers and lawyers, and they all wanted to discuss the American perspective, and what I thought might happen next in the UBS case.

First, I noted that Parliament’s rejection of the UBS settlement was due to political parties maneuvering and trying to add their special interests (such as tax on bonuses to bankers), rather than addressing the issue at hand, which is whether or not to approve the UBS settlement. Like in our US Congress, political interests often get tacked on to larger issues and cloud those larger issues. One Swiss lawyer at the Asset Protection conference called the parliamentary debate “political grandstanding”.

Next, I am hearing from Swiss colleagues, bankers and other attorneys, that the Swiss politicians expect to approve the settlement. In other words, apart from the other issues tacked on, there is an expectation that the settlement will pass Parliament, this week.

Much of the Swiss populace, however, is against the settlement because the Swiss people like banking secrecy and want it to continue. There is also an element of “stand up to the US”, or, in other words, don’t cave to the demands of the IRS and don’t compromise Swiss sovereignty. There is a possibility that if the settlement does not pass Parliament, it would have to be put to a public referendum across Switzerland. If that happens, it is expected that the UBS settlement would not pass public referendum because of the opposition of the Swiss people. And, if this does go to public referendum, a referendum would take months, which would cause UBS to miss its August 2010 deadline to hand over banking information to the IRS.

Yet another viewpoint in Switzerland is for Parliament to reject the settlement and to let UBS pay for its misdeeds. This viewpoint would sacrifice UBS, in return for Swiss sovereignty standing firm, and Swiss banking secrecy laws left standing.

If the settlement does not pass the Swiss Parliament, or if UBS does not otherwise comply with the settlement, then I can foresee two outcomes, both very negative.

First, the Department of Justice (DOJ) could bring UBS back to Federal Court in Florida, and argue that UBS is in “contempt of court”. UBS might counter with a defense of “impossibility”; in other words, UBS tried to comply with the settlement, but was prevented from complying by the Swiss courts and Swiss Parliament. UBS could even argue that it did what it agreed to do, i.e., deliver the banking information to the Swiss Federal Tax Authority (SETA), but the SFTA was prevented by Swiss law and the Swiss Parliament from passing the information to the IRS. I am not sure that a US court would agree with this argument, inasmuch as UBS and the Swiss government were both parties to the settlement agreement.

Second, the DOJ might argue that UBS violated the settlement agreement and is not cooperating.  The consequences might include the revocation of UBS’ banking license in the USA, with severe effects on UBS and the stock market. Because some 50,000 Americans are employed by UBS in the US, this would have additional negative consequences in the US. The US federal court might also seize UBS’ significant assets in the US. This would have severe implications for UBS and the Swiss economy, with ripple effects outward in the broader economy.

Because of these potential consequences, it is expected that the settlement will pass the Swiss Parliament, this week.

Americans with undeclared accounts at UBS are mere hours away from exposure and the IRS obtaining account data. Americans with undeclared accounts at Swiss banks other than UBS may have some more time, but eventually, non-UBS accounts will be discovered as well.

Time is Running Out: Swiss Parliament to Agree on Providing Bank Account Data to IRS

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For a few months, it seemed that the 2009 legal settlement between UBS and the Swiss and US governments was in jeopardy.  In January 2010, a Swiss court ruled that UBS would be in violation of Swiss law to abide by that settlement and hand over “secret” banking data to the IRS.  So, when that court made its controversial ruling, just like in the American system of government, the focus turned to the legislature to enact a law to get around the court decision.  For the last few months, we watched as the Swiss political parties maneuvered in favor or against proposed legislation to ratify the UBS agreement and to allow UBS to give up account data to the IRS.

It appears that the major political parties in Switzerland all now support the proposed legislation, which is expected to pass the Swiss Parliament sometime in June, and as early as one week from now.  The effect of this law will be to elevate the UBS settlement to the status of Swiss law, and thus overcome the Swiss court’s January ruling.

Along the same lines, a Protocol to the Swiss-US tax treaty, signed in March 2010 by Switzerland and the US, is also expected to be approved by the Swiss Parliament.  This Protocol ends the long-standing distinction, under Swiss law, between tax fraud and tax evasion.  In the past, this distinction prevented cooperation and information exchange between a Swiss bank and US authorities except in cases of overt fraud.  Now, under the new Protocol, cooperation and exchange of banking information would be mandated even in civil tax audits and investigations, far short of an actual tax fraud case.

The result of both of these actions by the Swiss Parliament: the end of Swiss banking secrecy vis-a-vis the IRS.

Our clients with bank accounts in Switzerland have already received letters from the Swiss Federal Tax Administration (SFTA) advising that the SFTA has determined to share their account information with the IRS.  The SFTA is merely waiting for the Swiss Parliament to meet in June and approve the new legal changes.  In just a few weeks, or even days, the bank account information will be on its way to the IRS.  However, because our clients authorized us to bring them to the IRS and make a pre-emptive disclosure of their Swiss accounts, the SFTA action and the Swiss Parliamentary process are non-issues.   These clients are already tax-compliant and need not fear disclosure by the Swiss authorities.

If you have a Swiss bank account and have not yet brought it into US tax compliance, the window is closing quickly.  Swiss Parliamentary approval is expected to occur imminently and will be a mere formality before banking data is handed over to the IRS.  Once the IRS learns of your Swiss account, the IRS will not accept your voluntary disclosure.  You would then be subject to criminal prosecution for tax fraud.  The time to make the account tax compliant via voluntary disclosure is right now, before the Swiss Parliament meets in June, and the SFTA starts sending files to the IRS.