The US Internal Revenue Service announced that their Advance Pricing and Mutual Agreement office will begin accepting requests for bilateral advance pricing agrements between the United States and India starting February 16, 2016.
During the last two weeks of 2015, the United States Department of Justice announced that Bank Lombard Odier& Co Ltd, DZ Privatbank (Schweiz) AG, Bank J. Safra Sarasin AG, Coutts & Co Ltd, Gonet & Cie, and Banque Cantonal du Valais reached resolutions under the department's Swiss Bank Program. These banks collectively will pay penalties of more than $285 million.
Now that the United States and numerous foreign jurisdictions have begun the automatic third-party financial account reporting exchange, it is less likely that offshore financial accounts will go unnoticed by the IRS. The IRS reminds taxpayers to take advantage of the Offshore Voluntary Disclosure Program (OVDP) or streamlined procedures to come into compliance regarding offshore accounts. Since OVDP began in 2009, there have been more than 54,000 disclosures from which the IRS has collected over $8 billion. In the past year, 20,000 taxpayers have participated in the streamlined proceedures designed for taxpayers whose non-compliance was not willful. Thanks to information obtained from investigations and settlements with foreign financial institutions, the IRS has conducted thousands of offshore-related civil audits resulting in tens of milions of dollars. The total assessed in criminal fines and restitutions is now in the billions. To read the complete bulletin, see IR 2015-116.
The IRS met its deadline to begin the reciprocal automatic exchange of tax information with some foreign jurisdiction tax administrators as agreed under the intergovernmental agreements (IGAs) as part of the Foreign Account Tax Compliance Act (FATCA). As of September 30, 2015, the IRS can now reciprocate and provide information to the other jurisdictions who have shared information regarding financial accounts held by U.S. taxpayers with the IRS. The information now available provides the United States and partner jurisdictions an improved means of verifying the tax compliance of taxpayers using offshore banking and investment facilities, and improves detection of those who may attempt to evade reporting the existence of offshore accounts and the income attributable to those accounts.
On Friday, October 2, 2015, the Internal Revenue Service ("IRS") announced the exchange of financial account information with certain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act.
Once again, the Department of Justice has flexed its muscles and shown dishonest financial professionals that if they help clients hide assets offshore or create sham entities for clients to evade taxes, they will be prosecuted. The tax preparers in this case helped their wealthy clients to conceal millions of dollars of assets and income in secret foreign bank accounts, filed false federal income tax returns, maintained an offshore account in the name of a sham corporation and failed to disclose the account to the IRS. They also failed to file a Report of Foreign Bank and Financial Accounts (FBAR). Two of the three tax preparers have been sentenced to 36 and 50 months in prison and ordered to pay fines of nearly $300,000. The third tax preparer is still at large. To learn more, click here.
In the past two weeks, three Swiss banks--Bank Linth LLB AG (Bank Linth), Bank Sparhafen Zurich AG (BSZ), and Ersparniskasse Schaffhausen AG (EKS)-have reached resolutions under the Department of Justice's Swiss Bank Program. The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
For those with one or more bank of financial accounts located outside the United States, or those who have signature authority over such accounts, Report 114, Report of Foreign Bank and Financial Accounts is due Tuesday, June 30, 2015. For more information, see the IRS website here.
In a recent edition of TaxTips, the IRS reminds taxpayers of pending deadlines related to foreign income and assets.
After helping taxpayers hide assets in offshore bank accounts for more than 10 years, Bank Leumi entered into an agreement with the Department of Justice in which it will pay the United States $270 million as a penalty and will make a full and complete disclosure of its U.S. Taxpayer-held accounts. As recently as 2011, Bank Leumi admits to taking affirmative and extensive steps to assist U.S. Clients in concealing assets offshore including secretly meeting with U.S. Clients in hotels, parks and coffee shops, using nominee corporate entities in Belize and other foreign tax jurisdictions, hiding the true account owner identities, providing mail hold services to make account detection more difficult, and assisting clients who had accounts at UBS and other financial institutions undergoing criminal investigation by the Department of Justice in moving funds to other secret accounts.For more information, click here.