Switzerland’s neutrality throughout the 20th Century allowed its banking sector to develop and thrive. That development was aided by strict bank secrecy laws, which generally prohibited banks from revealing the names of account holders. These secrecy laws frustrate the U.S.’s enforcement of its own tax laws, which require reporting of U.S. citizens’ foreign income and bank accounts.
The U.S. taxes its citizens and residents on worldwide income, including income earned on assets in Swiss and other foreign banks. In addition to reporting income earned in foreign accounts, U.S. citizens and residents are required to report, on an annual basis, their foreign accounts on a Foreign Bank Account Report (“FBAR”). Failing to report income or file an FBAR can result in significant civil or criminal penalties.
The U.S. government has long maintained that the Swiss banks have helped Americans hide Swiss accounts. In 2009, the U.S. government charged the largest Swiss bank, UBS AG, with conspiring to defraud the United States by impeding the IRS. As part of its settlement, UBS agreed to pay a $780 million fine and provide the identities of and account information for certain U.S. customers. In 2003, the oldest private bank in Switzerland, Wegelin Bank, pled guilty to felony tax charges. At this time, the U.S. government is criminally investigating at least fourteen Swiss banks, including Credit Suisse Group AG and HSBC Holdings Plc.
Last year, U.S. officials gave Swiss banks not then under criminal investigation until December 31, 2013 to seek non-prosecution agreements from the U.S. government if the banks had “reason to believe” they violated U.S. tax laws. Under this amnesty program, the Swiss banks have to provide data on their U.S. account holders’ undeclared accounts, pay penalties, and provide information about their efforts to help clients avoid U.S. taxation. According to government prosecutors, more than 100 banks (roughly one-third of all eligible Swiss banks) have elected to participate in the non-prosecution program. The Swiss banks participating in the amnesty program are required to provide data on undeclared accounts no later than April 30, 2014.
Swiss banks have been sending notices of their intent to participate in the non-prosecution program to their U.S. customers. U.S. account holders receiving these notices should immediately seek the assistance of an experienced tax attorney.
The attorneys at the Pittsburgh law firm Williams Coulson have successfully advised many clients with respect to foreign financial account matters, including the 2009 Offshore Voluntary Disclosure Program, the 2011 Offshore Voluntary Disclosure Initiative, the 2012 Offshore Voluntary Disclosure Program, and this new program. Should you have questions concerning this amnesty program or other foreign financial account matters, please contact Stephen J. Pieklik at 412-454-0229 or firstname.lastname@example.org.