The 2014 Offshore Voluntary Disclosure Program (OVDP), which helps United States taxpayers with undisclosed foreign financial accounts achieve compliance with the Internal Revenue Service (IRS), is in full swing. One of the caveats of the program is that if your name has been disclosed to the IRS, you cannot enter the program. Furthermore, if your bank has been named a target under investigation and you have not requested pre-clearance into the program before August 4th, you may be subject to a higher offshore penalty (50% versus the current 27.5%). The Department of Justice (DOJ) in conjunction with the IRS indicates that it has been very successful with its current Program for Swiss Banks (PFSB), but it is not stopping there.
In fact, information points to the possibility of India being among the next locations targeted for the IRS’ offshore tax evasion restrictions and prosecution. Last October, a medical device mogul was prosecuted for hiding his foreign accounts in HSBC Holdings in India. He faces as long as 10 years in prison for preparing and filing false tax returns and failing to file Reports of Foreign Bank and Financial Accounts (FBARs).
Why Might India be Next?
There are strong indications that the next targets involving foreign financial institutions will be Israel, India, and the Caribbean. It is highly likely that the DOJ and IRS will apply the same scheme used under PFSB to these countries. Considering prosecution for foreign accounts in Indian banks has been underway for quite some time, it is among the next big targets for the IRS.
Across all these IRS’ foreign account programs, some banks are highly targeted. The top 10 banks targeted for undisclosed foreign accounts are listed in order below.
- UBS AG
- Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
- Wegelin & Co.
- Liechtensteinische Landesbank AG
- Zurcher Kantonalbank
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
- CIBC FirstCarribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
- The Bank of N.T. Butterfield & Son Limited (aka Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
What does this mean?
If you have undisclosed Swiss bank accounts, you should seek assistance immediately to get in compliance with the IRS. There are programs to help minimize your risk and penalties until August 4th, when penalties become much more severe.
If you have undisclosed foreign accounts in any location other than Switzerland, including India, Israel, the Carribbean, or any of the banks listed above, you should seek council and work toward compliance with your foreign accounts as well. The IRS has begun relentlessly seeking hidden foreign accounts and levying heavy penalties or prosecuting the account holders.
Don’t wait! Five Stone Tax Advisers can help with foreign account compliance today.