New York, NY – December 8, 2008 – The I.R.S. today signed an agreement with the government of Liechtenstein whereby Liechtenstein will exchange information pursuant to I.R.S. audits. At the same time, the current legal challenges against UBS, HSBC and Credit Suisse for aiding tax fraud have placed U.S. owners of undisclosed “secret” foreign bank accounts at serious risk of I.R.S. prosecution. This is especially true for U.S. owners of Swiss accounts. Beneficial owners of undisclosed foreign accounts must therefore give immediate consideration to minimizing the risk of I.R.S. prosecution for tax fraud.
One way to limit the risk of prosecution is to convert a non-compliant offshore account into a tax compliant structure. Offshore strategies exist which can accomplish significant asset protection and tax minimization, and which are completely legal and tax-compliant. Although taxpayers cannot undo a non-compliant past, they can ensure full compliance going forward. Such steps may significantly reduce the chance of prosecution for previous violations.
A second strategy is the voluntary disclosure of your interest in a non-compliant offshore account before the I.R.S. discovers it. Qualified legal counsel can approach the I.R.S. on a hypothetical “no-name” basis, demonstrate proper current compliance, and negotiate on your behalf to prevent criminal prosecution and possibly reduce fines and penalties for past non-compliance.
The quickest and best way to bring a non-compliant account into compliance, as well as minimize the risk of I.R.S. discovery of prior non-compliance, utilizes the agreement signed today with Liechtenstein. The agreement requires Liechtenstein to share information with the I.R.S. with respect to specific administrative investigations (audits) covering tax year 2009 onward, but not earlier. This means that if a non-compliant Swiss account, for example, is closed and the funds sent to a compliant Liechtenstein account before December 31, 2008, in the event of an investigation, Liechtenstein will only share with the I.R.S. 2009 information on the compliant account. Obviously this option requires immediate implementation.
Beneficial owners of undisclosed foreign accounts must evaluate their options and take immediate steps to minimize the risk of I.R.S. prosecution for tax fraud. Failing to remedy a non-compliant offshore account puts you at serious risk of harsh penalties, including I.R.S. criminal prosecution, in the event of discovery. As recent events have proven, discovery is very likely.
Rubinstein & Rubinstein’s attorneys have a wealth of experience dealing with offshore accounts and associated U.S. reporting requirements, as well as structuring tax compliant offshore strategies and representation before the I.R.S. For more information about Rubinstein & Rubinstein’s legal services, including asset protection, wealth preservation and tax planning, please visit www.AssetLawyer.com.