On August 29, 2013, the U.S. Department of Justice and the Swiss Federal Department of Finance issued a joint statement, announcing a Program for Swiss Banks, which encouraged the banks to come clean in exchange for a Non-Prosecution Agreement by the U.S. government. Under the terms of this agreement, most Swiss banks have until December 31, 2013, to notify the Tax Division of the Department of Justice of its intent to participate in the Program.
Under the Program for Swiss Banks, those banks that have a reason to believe that they have committed tax or related offenses under U.S. laws, are considered to be Category 2 banks. They may seek a Non-Prosecution Agreement in exchange for certain disclosures of specific data related to U.S. account holders. In order to obtain a Non-Prosecution Agreement, Category 2 banks must submit a letter of intent to the Tax Division no later than December 31, 2013. After that deadline, the Department of Justice can treat any bank not yet in the program as a target of a new investigation and no longer eligible for the Non-Prosecution Agreement. Category 2 banks will have to pay penalties between 20% and 50% of untaxed balances and provide some account data to the U.S. government, including information about Americans that had closed their Swiss accounts and moved funds to other offshore jurisdictions.
As the December 31st deadline is approaching, about a dozen of Swiss banks have indicated that they are entering the Program. These banks include Bank Coop, Migros Bank, Valiant Holding, Linth Bank and some of the cantonal banks. Those banks began sending letters to their U.S. clients, notifying them that their account information may be turned over to the DOJ or IRS. As a part of the deal, the banks may also encourage their U.S. clients to participate in the IRS Offshore Voluntary Disclosure Program.
The fourteen banks that are currently under criminal investigation by the U.S. are not eligible to participate in the Program. These banks are believed to include Credit Suisse, Bank Frey, Julius Baer and some others. Those banks that conclude that they have not violated U.S. tax laws, and which may be considered Category 3 or 4 under the Program, can submit their letters of intent after July 1, 2014.
If you have questions about Swiss or other offshore accounts, you may schedule a consultation with one of our Former IRS Attorneys at (310) 550-6200.