Swiss Bank Mitigation of Penalty Deadline Approaches September 15, 2014

The Department of Justice Tax Division released commentary and guidance in regards to the Program for Non-Prosecution Agreements (NPA) or Non-Target Letters (NTL) for Swiss Banks.

The commentary reiterated several deadlines and points that are worth mentioning.

  1. The grace period for criminal investigation authorizations for Swiss banks expired on 12-31-13. The Tax Division may authorize a formal criminal investigation of any Swiss bank that has not timely submitted a letter of intent to participate in the aforementioned program at any time.
  2. NPAs only covers conduct by the bank related to tax offenses. If the conduct is not disclosed then the NPA will not cover the bank.
  3. Category 1 Swiss Banks are banks under criminal prosecution or indictment.
  4. Category 2 Swiss Banks provided information on conduct by the bank related to tax offenses to the DOJ to attain an NPA on 06-30-14.
  5. The qualified independent examiners of each bank provided their verifications to the Tax Division on 07-31-14.
  6. For mitigation of penalty purposes, the deadline for Swiss banks to demonstrate whether an undisclosed or undeclared account was extended from 06-30-14 to 07-31-14.

For Swiss banks to mitigate penalties

Which bring us to August 1, 2014. The Tax Division of the Department of Justice has given Swiss banks until September 15, 2014 to demonstrate that U.S. or dual-citizen account holders in their banks with undisclosed or undeclared accounts have disclosed these accounts to the IRS through the Offshore Voluntary Disclosure Program.

For U.S. or dual-citizen account holders

The Tax Division intends to publicly release the fact that the Tax Division has entered into NPAs with Category 2 banks. This can occur at any time after August 4, 2014. Once the Tax Division publicly releases the NPAs, any account holder in one of these banks that has not entered the offshore voluntary disclosure program previous to the disclosure and wishes to afford themselves the protections of the program (non-prosecution and exam certification) will only be able to access the 50% offshore penalty as opposed to the 27.5% offshore penalty.

Other deadlines

The time for Swiss banks to submit letters of intent to enter categories 3 and 4 have been named as follows:

  • Category 3 – October 31, 2014
  • Category 4 – December 31, 2014
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by Five Stone Tax

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