The Tax Times: U.S. Client of Credit Suisse? Last Chance To File A Voluntary Disclosure!

Thousands of Credit Suisse Group AG’s U.S. clients still don’t know whether tax authorities will learn their identities as prosecutors work to conclude a three year probe of how the bank helped them evade taxes.

We posted on February 25, 2014, Report to Congress: Credit Suisse Help US Taxpayers Hide Billions in Offshore Accounts! where we discussed the Permanent Subcommittee on Investigations (PSI) of the United States Senate held a hearing, “Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts,” on Wednesday, February 26, 2014.

The PSI hearing's stated purpose of continuing the PSI’s examination of tax haven bank facilitation of U.S. tax evasion, focusing on the status of efforts to hold Swiss banks and their U.S. clients accountable for unpaid taxes on billions of dollars in hidden assets. Witnesses include representatives from Credit Suisse and the U.S. Department of Justice.

The report alleged that Credit Suisse Group AG helped thousands of U.S. taxpayers hide billions in assets offshore. The report shows that Credit Suisse opened Swiss accounts for more than 22,000 U.S. customers that, at their peak, totaled between $10 billion and $22 billion. The “vast majority” of these accounts were hidden from the U.S. and despite years of investigations by the Justice Department, the bank has turned over just 238 names to U.S. authorities.

The report criticizes the Justice Department for not concluding its probe of Credit Suisse, which has been underway since at least 2011, the people said. Levin’s subcommittee says prosecutors have withdrawn subpoenas and become bogged down in a treaty process between the U.S. and Switzerland over the transfer of data about American client accounts, according to one of the people.

“The department’s criminal investigations of offshore tax evasion are robust and ongoing,” Emily Pierce, a Justice Department spokeswoman, said in an e-mailed statement. “Together with the IRS, we are using a variety of tools to pursue taxpayers who have maintained secret accounts and the banks and banking professionals that facilitated their conduct.”

The pressure of a subcommittee report and hearings will force prosecutors to act more aggressively as they negotiate a settlement with Credit Suisse to end the probe and get more names, said Jeffrey Neiman, a former federal prosecutor.

Senator Levin urged Cole to draw lessons from the case five years ago against UBS. The U.S. asked a court in 2008 for authority to serve a John Doe summons seeking the identities of UBS account holders. A day after the deferred- prosecution agreement, the IRS filed a lawsuit to enforce the summons while also seeking the names of 52,000 UBS clients. Within days, the U.S. and Swiss governments and UBS began settlement talks. The US judge's order spurred those negotiations, said Stuart Gibson, then the Justice Department attorney litigating the case. After Secretary of State Hillary Clinton stepped in, UBS and the Swiss agreed to hand over data on 4,450 accounts.

The Swiss disclosure program will lead to 106 banks’ producing information short of client names. We posted on January 28, 2014, Offshore Swiss Bank Account? This May Be Your Last Chance To File A Voluntary Disclosure! where we discussed that the United States Justice Department has received 106 requests from Swiss entities to participate in a settlement program aimed at ending a long-running probe of tax-dodging by Americans using Swiss bank accounts according to a senior US official. That post also discussed that Credit Suisse, Switzerland's second largest bank, is close to reaching its own settlement with the US DOJ. Credit Suisse is one of the 13 banks excluded from the US DOJ amnesty because it was already being investigated when he program was announced, but it is still free to negotiate its own non-prosecution deal.

Credit Suisse will have to disclose a great deal of information about its American clients, even including some of their names.

Now the Swiss Parliament has approved a legal amendment that tax evaders will not always have to be told if Switzerland sends information about them to other countries. The move further loosens Swiss banking secrecy laws in order to avoid a global backlash.
Thus US taxpayers who have used a Swiss bank accounts may now want to consider applying for the US Offshore Voluntary Disclosure Program (OVDP), which sets a limit to the penalties imposed on them by the Internal Revenue Service (IRS) for failing to declare foreign assets and earnings.

However, once the Swiss banks disclosed an account holder's name to the IRS, OVDP election is no longer available to that account holder.

Taxpayers Who Wish To Take Advantage

Of The OVDP Must Act Quickly!

The new agreement makes clear that “personal data provided by the Swiss banks… will be used and disclosed only for purposes of law enforcement (which may include regulatory action) in the United States or as otherwise permitted by US law.”

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