- 1 How FATCA Ended Swiss Bank Secrecy, What Now?
- 2 Do you have a Numbered Account?
- 3 Foreign Entity Associated with the Swiss Account
- 4 Have You Reported the Swiss Accounts to the US Government?
- 5 Did you Report the Swiss Account Income?
- 6 Were you Willful?
- 7 We Specialize in Streamlined & Offshore Voluntary Disclosure
How FATCA Ended Swiss Bank Secrecy, What Now?
Over the past 10-years or so the United States Government has made international tax compliance a key enforcement priority. Many Taxpayers who are considered US persons may have one or more foreign accounts in Switzerland that require reporting to the US Government. For many years, Switzerland was a hotbed for taxpayers to park their money in a “numbered account” and not worry about the US government interfering with the growth of the investments. Then about 15 years ago, the United States and various Swiss Financial Institutions entered into deferred prosecution agreements, in which these foreign financial institutions exposed US persons to the US government by referring the names of these individuals to the US government – which led to increased enforcement by the IRS and DOJ. Now that FATCA has all but ended Swiss Bank Secrecy, what are some options for taxpayers?
Do you have a Numbered Account?
Just having a Swiss bank account does not mean you have committed a tax crime. Even if you have a numbered account, in and of itself that does not mean that you committed any tax violation. But if you have a numbered account, it could lead to more suspicion by the Internal Revenue Service and DOJ — because oftentimes Swiss Numbered Accounts were used to hide taxpayer information from the US government. Therefore, if you have a Swiss bank account you should double-check whether it is a numbered account or not.
Foreign Entity Associated with the Swiss Account
Sometimes, foreign financial institutions in Switzerland would set up bank accounts that provided a nominee entity in lieu of the name of the true account holder. If you are in a situation in which there is a foreign entity being used as a nominee as the owner of your account, it is important to get more information about the specific entity being used because not only will this impact foreign account reporting — but there is the ancillary concern about reporting foreign corporations to the IRS (Form 5471; Subpart F Income; GILTI)
Have You Reported the Swiss Accounts to the US Government?
Whether or not you have a numbered account (or a traditional bank or securities account) — if you meet the threshold requirements for filing, then you are required to report the existence of the account on various different international information reporting forms. Therefore, you should determine if you were in compliance for prior years for your Swiss bank account.
Did you Report the Swiss Account Income?
If you have foreign bank accounts in Switzerland and those bank accounts are generating income, then you may have to report that income on your US tax return — and may have a tax liability on the gains. If you happen to have foreign pooled funds such as mutual funds, ETFs, or SICAVs, then you may have a much more complicated reporting and tax requirement in accordance with the PFIC rules.
Were you Willful?
When you come to the determination that you would like to get into compliance for prior years’ non-reporting, the main threshold requirement and want to determine if you qualify for certain programs such as the streamline procedures – the key issue is whether or not you were willful or non-willful. Unfortunately, there is no bright-line test to make this determination and therefore you should speak with an experienced Board-Certified Tax Law Specialist who specializes exclusively in offshore tax matters to assist you with evaluating your compliance options.
We Specialize in Streamlined & Offshore Voluntary Disclosure
Golding & Golding specializes exclusively in international tax and specifically IRS offshore disclosure.
Contact our firm today for assistance with getting compliant.