U.S. citizens and permanent residents are required by law to report any assets held in foreign bank accounts to the Internal Revenue Service (IRS). With the upcoming implementation of the Foreign Account Tax Compliance Act (FATCA), it will be extremely difficult for Americans to conceal funds held in other countries. In addition to FATCA, the United States has strengthened its ability to find and prosecute tax evaders by entering a new cooperative agreement with Switzerland.
In the deal, certain Swiss banks will be immune from criminal prosecution if they provide detailed information about American account holders. Once of the world’s largest tax havens, Switzerland, has made a marked change in its stance on tax evasion, at least with its dealings with the United States, and a senior Justice Department official has acknowledged the country’s efforts.
“If someone had an account in Switzerland, it is beyond foolish to think that that account is going to remain secret,” said Kathryn Keneally, assistant attorney general in the Justice Department’s tax division, in an interview with Bloomberg. “In the last five years, we’ve seen a remarkable change in our ability to get information concerning Swiss bank accounts. It’s extraordinary. Switzerland is no longer a good place to hide assets for tax reasons.”
Since 2009, the government has criminally prosecuted many U.S. taxpayers, negotiated hundreds of deals outside of court, and prosecuted banks, bankers, lawyers and advisers for tax evasion and related crimes such as false statements, tax perjury, obstruction of justice, failure to file, FBAR and Reporting violations, and other tax related crime. Initially the US targeted Switzerland in its Offshore Bank Account Initiative.
As we have previously blogged about, technology and FATCA are closing the net on individuals and entities who hold foreign bank account and assets. If you have any undeclared assets in Swiss banks or any other foreign institutions, you should seek the advice of an experienced tax attorney immediately.