Monday, January 27, 2014

DOJ Tax AAG Keneally Reports on Swiss Banks Joining DOJ Swiss Bank Program (1/27/14; 1/28/14)

At a bar meeting, DOJ Tax AAG Keneally made an interim report on the U.S. Swiss bank program.  David Voreacos, Swiss Banks Seek Tax Amnesty as Third Accept U.S. Offer (Bloomberg 1/26/14), here. I include excerpts from the article in indents and comments in the flush presentation::
One-third of Swiss banks offered amnesty by the U.S. for helping Americans evade taxes have applied for the program, a federal prosecutor [AAG Keneally] stated at a Jan. 25 conference, according to three lawyers. 
The U.S. government gave more than 300 Swiss banks until Dec. 31 to seek non-prosecution agreements if they have “reason to believe” they violated tax laws. Some 106 sought to join the initiative, which requires participants to disclose how they helped Americans hide assets, hand over data on undeclared accounts and pay penalties. 
I think that those who joined are category 2 banks which were the ones who had to join by 12/31/13.  If the number is 106 and that represents one-third of banks "offered amnesty," then my math indicates that some 318 banks -- probably an approximate number -- were offered amnesty.  If is not clear to me that any set or finite number of banks were offered amnesty.  I think it was a general offer as to which banks would self-identify to join.  So, it is not clear to me where the number 318 ( app.) came from.
Bryan Skarlatos, of Kostelanetz & Fink LLP in New York, who attended the conference, said the number of banks that signed letters of intent was more than expected.
“It’s a result of the banks’ desire to have some certainty regarding their status with DOJ,” Skarlatos said. “I believe that DOJ is pleased with the response to the program so far.”
I don't think banks joined just to achieve certainty, although that may be one of their goals (when that certainty is cheaper than would be the alternative of not joining).  They were supposed to join if they self-identified misbehavior (or at least the strong possibility would that their behavior could be construed as misbehavior).  So, I think that well-counseled banks (and I am sure they were) would have joined to get a certain result that was less than the probable result if they did not join.  In that sense, I don't doubt that they did desire certainty.
“She [AAG Keneally] said that every new bank in the program is a new source of information, especially on where the money went, either to other Swiss banks or banks around the world,” said Josh Ungerman of Meadows Collier Reed Cousins Crouch & Ungerman LLP in Dallas. “She said there are a lot of avenues to get information, and some are visible and some are not so visible.”
 The message is -- those U.S. taxpayers who have not yet outed via OVDI/P need to do so.
At least 33 [Swiss banks] announced through late December that they will join some form of the program, including 19 cantonal banks, or regional lenders typically owned by regional governments.
They include Union Bancaire Privee, the Geneva-based bank founded by Edgar de Picciotto in 1969; Edmond de Rothschild Group, the Geneva-based wealth manager owned by Baron Benjamin de Rothschild; EFG International AG (EFGN), controlled by Greek billionaire Spiro Latsis and his family; and Bern-based Valiant Holding AG. (VATN)
Note that these are the public announcements.  Many, perhaps most Swiss banks are not publicly held and thus do not have to publicly air their dirty linen (their dance with U.S. prosecutors to mitigate the damage).  As noted above, the actual number actually joining is 106.  In this regard, my spreadsheet now includes the banks joining the initiative.  My spreadsheet indicates 48 (not including the category 1 banks who the IRS self-identified as being in that category 1).
The program has provoked Swiss debate on whether the U.S. went too far in trying to pierce banking secrecy that protected American tax cheats for decades. The crackdown escalated after 2009, when the U.S. charged UBS AG (UBSN), the biggest Swiss bank, with helping Americans hide $20 billion in assets.
I am sure that the Swiss have a lot of angst, anger and gnashing of teeth over this U.S. initiative.  But, on the other hand, the U.S. has a lot of angst, anger and gnashing of teeth over learning the scope of the Swiss banks' raid on the U.S. treasury and enticing U.S. citizens into misconduct.

Addendum 1/28/14 9:30 am:

Tax Notes Today reports on the same meeting.  William R. Davis and Lee A. Sheppard, Keneally Reports Success With Swiss Bank Program, 2014 TNT 18-3 (1/28/14).  Here are some select excerpts adding to the above (bold face added by me to draw readers' attention):
"Anyone who thinks they can hide money in Switzerland is fooling themselves," because of support received from Switzerland, said Kathryn Keneally * * * *. 
* * * * 
"We have not determined that they [the 106 banks joining] are all banks, or are Swiss banks. We may have some entities that are trying to get in the program but don't quite fit in the definition," Keneally said. She does not expect 106 non-prosecution or deferred prosecution agreements. As impressive as the number is, one private practitioner estimated that some 350 banks holding 40,000 accounts have not come in. 
"From our point of view, every bank that comes forward under the program is a new source of information for us," Keneally said. "Given the information we expect to receive from these banks about closed accounts and where the money went, I would think that anybody anywhere in the world that has an unreported offshore bank account will be well advised to come forward." 
Keneally isn't surprised that a significant number of the letters of intent indicate that the banks are still early in their internal investigations and may try to become category 3 banks. Category 3 is reserved for banks that did not violate United States law. 
The program says the banks can reduce their penalties if they can show they encouraged their account holders into the voluntary disclosure program, and after that encouragement, the disclosures came in. But if account holders volunteer information on their own and their banks failed to encourage compliance, the banks will not get credit, Keneally said. 
Holders of Swiss bank accounts have a right to appeal disclosure of their account information. Recently, a Swiss court blocked * * * disclosure of account information by the Julius Baer private bank under a U.S. group request, using the pejorative phrase fishing expedition. Keneally told her audience not to rely on the decision because DOJ has other ways to get information. * * * *. 
"We have a lot of avenues for getting information now, some of them visible and some of them not visible. Anyone who thinks they can hide their money in Switzerland or elsewhere is full of themselves and has been for a long time," Keneally said. 
 The TNT report also notes that Keneally said that the IRS does not face the same interpretational barrier ["fraud and the like} under other treaties that it encountered with Switzerland.  So, treaty requests to other countries may be more productive, although as noted the U.S. found some work-arounds for Switzerland.

54 comments:

  1. Jack this one is for you :

    http://dealbreaker.com/2014/01/ubs-chief-people-should-let-the-occassional-legal-or-ethical-slip-slide-because-nobodys-perfect/

    ReplyDelete
  2. It would make much more sense to help US indicia in Belgium to have a local checking account:


    "They got their orders to block all US citizens accounts until they can prove that they dont owe taxes to the US."
    http://www.expat-blog.com/forum/viewtopic.php?id=330388#.UuaPVxLj0Lc.twitter





    The US Department of Justice has become so heavily obsessed with its crimes, that it is eagerly harming the innocent for all the worng reasons.

    ReplyDelete
  3. Swiss Bank
    Accounts. 2014.

    Is your monies safe
    in these accounts ---- definitely NOT.

    Would you get your
    money back if every body decided to withdraw all their accounts –
    NO WAY.

    Economic Experts
    say that there would only enough money to repay 50% of their clients.

    Are you going to be
    in the 50% --- that loose your money.-- Get it out NOW.

    2012 -- - June.
    -- Published in Anglo INFO .Geneva.--- USA Trust Fund Investors were
    sent false and fraudulent documents by Pictet Bank.Switzerland. in
    order to collect large fees. ( Like MADOFF) ---Even after the SEC in
    the USA uncovered the fraud Pictet continued to charge fees and drain
    whatever was left in these accounts. Estimated that $90,000,000
    million lost in this Pictet Ponzi scheme.

    2012 - - - July.
    -- De – Spiegel. -- states – Pictet Bank uses a letterbox
    company in

    Panama
    and a tax loophole involving investments in London to gain

    German
    millionaires as clients.



    2012
    - - - August ---- German Opposition Leader accuses Swiss Banks of
    "organised crime."

    All
    the fines that crooked Swiss banks have incurred in the last few
    years exceeds £15.Billion.

    It
    is also calculated that the secrecy " agreements" with
    regards to tax evation by their clients will cost the banks another
    £45 Billion.

    The
    banks are panicking --- the are quickly restructuring their banks
    ---- from partnerships --

    to
    " LIMITED COMPANIES." ----- this will probably mean that
    in the future --- they could

    pay
    you only 10% of your monies " if you are one of the lucky ones"
    ---- and it be legal.

    ReplyDelete
  4. Sods -----
    Law.

    January.----
    2014.

    For almost two
    decades we have strived to get justice for the injustice we have
    suffered at the hands of a world renowned bank--- PICTET & CIE.
    BANK.

    Two yorkshiremen
    both running their own small family businesses trying to resolve the
    problem by taking all the correct legal procedures to recover their
    monies.

    The matter was
    raised in Parliament – twice-- the FSA investigated the matter
    concluding that PICTET had rogues operating in their London Bank ---
    but the rogues had left ---saying no one left to prosecute.??? -----
    so there.

    We then
    approached the Financial Ombudsman Service. (FOS) --- our case was
    dealt with by seven different people ---- then our numerous E-Mails
    were ignored --- nobody would speak to us -------so there.

    We then asked the
    SFO ( Serious Fraud Office.) to investigate our case ---- the
    criteria of our case ticked all their boxes. --- we were instructed
    not to send them any documents/evidence.------ in fact they wrote to
    us advising us to go to the Citizen's Advice Bureau.(CAB.)

    Richard Alderman
    the SFO boss ---- who responded to our letter was the same man who
    would not investigate the “ Madoff” scandal or the “Libor”
    fiasco.

    The MP's
    committee ---- said he was sloppy--- and the SFO was run like “
    Fred Karno's Circus” ------- so there.

    Our M.P.
    approached our local Chief Constable to investigate----- he was
    called---- Sir Norman Bettison--- Chief Constable of West Yorkshire
    Police ---- a force that made “ Dad's Army” look like the S.A.S.
    They were inept – corrupt ---malicious --- from top to bottom. We
    were criminally dealt with by the Forces Solicitor---- the Head of
    the Economic Crime Unit ----and the Chief Constable ----- so there.

    We were then
    advised to pass our complaint against West Yorkshire Police to the
    I.P.C.C. – which we did --- they advised us to make our complaint
    to ---- the West Yorkshire Police --- we did with reluctance --- all
    we got was abuse and obfuscation. ----- so there.

    Sir Norman
    Bettison ---- The Forces solicitor--- and the Head of the Economic
    Crime ---- have all been removed from their posts and facing criminal
    allegations.

    ------ so there.

    We even sought
    justice through the Courts --- culminating in a visit to the Court of
    Appeal-London.--- On leaving the Courts of Appeal that day our
    barrister a “rising star” informed us --- that if that was
    Justice then you can keep it. He quit the law and moved to Canada
    ----- so there.

    A few years later
    we learned that one of the judges in our case at the Court of Appeal
    was related to a senior executive of the Pictet Bank -----so there.

    Pictet & Cie
    .Bank --- voted private bank of the year 2013.

    Ivan Pictet ----
    Voted banker of the year 2012. ---- the senior partner --- lied on
    numerous occasions and had documents destroyed --- also said genuine
    documents were forgeries. ----- so there.

    Ivan Pictet in
    Oct. 2013 ---- Given the Legion of Honour --- but saying that ----
    honours were given to Hitler --- Eichmann --- Mussolini ---Franco
    --- he's in fitting company. ----so there.

    MONTY
    RAPHAEL.Q.C. -- Peters & Peters.London. They were the banks
    lawyers.

    Monty
    Raphael.Q.C. along with Ivan Pictet withheld crucial documents
    requested by the High Court ---- the FSA ---- and the police Fraud
    Squad. ----so there.

    Monty
    Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.

    Monty
    Raphael.Q.C. became a Master of the Bench in Nov.2012.

    An expert in
    Fraud ---the Doyen of Fraud Lawyers. ----- so there.

    This says a lot
    about Banks --- the consensus of opinion is that they are highly paid
    “crooks” ---- no wonder they voted Ivan Pictet banker of the
    year.

    Full Story.----
    “google ”

    Insert.

    Ivan
    Pictet.Banker.

    Monty
    Raphael.Q.C.

    Ivan Pictet/Monty
    Raphael.

    ReplyDelete
  5. While the US government is waging jihad against any innocent bank which accepted an innocent middle class American client who needs a local checking account to pay the rent, the US government is honoring any bank which is being criminal against the American people, rejecting them due to their citizenship or national origin, in violation of US law:

    http://www.finews.ch/news/banken/14115-us-steuerprogramm-auslandsbanken-verband-schweiz


    Jack, when are you going to fight against crime instead of honoring and defending its practice?

    ReplyDelete
  6. The only purpose of "Category 2" is to reward banks which violate US federal laws prohibiting national origin discrimination and citizenship status discrimination by rejecting US clients.

    ReplyDelete
  7. Just a couple of comments.
    Cantonal banks are owned by the cantons. Switzerland is a confederation of 23 cantons (3 of which are split into half-cantons) so "regional" when applied to such banks is a misnomer.

    "Swiss banks' raid on the U.S. treasury and enticing U.S. citizens into misconduct." Though UBS and perhaps others may have engaged in enticing, it would seem that most accounts in most banks were simply walk-in business that was accepted. In the case of those whose money originated while living/working abroad this is not a "raid on the US treasury."

    The use of the word "hide" and "hiding money." Again, many of those of us with foreign homes, jobs, and family this is no more hiding than Us persons having a US bank account, though as a consequence of the IRS' one-size-fits -all approach, many may start "hiding" simply to be able to deposit their pay, buy groceries and so on.

    Focusing solely or primarily on Switzerland is a mistake. Places such as the Bahamas, Bermuda, Cayman Islands, and Turk and Caicos Islands are offshore money centers 1) much closer to the US and thus more convenient to visit 2) are English-speaking, which is important to notoriously monolingual Americans 3) there are few Americans living and residing in these small jurisdictions, and with a need for a local bank account. However, 4) these are all part of the British commonwealth and better protected than Switzerland. Other major money centers: Isle of Man, Channel Islands, Hong Kong and England (all British commonwealth; HK formerly British Crown Colony) as well as Singapore (the only one on the list NOT British commonwealth.)

    ReplyDelete
  8. Message to US persons in Belgium and other countries: Don't have a bank account. Deal in cash. In other words the US is forcing people into the cash economy which in the long term would result in lower tax collection and less information reported to the US.

    ReplyDelete
  9. cash : this trend has started already since the beginning of last year with regular monthly withdrawals......and so far the cash is not returning.....

    ReplyDelete
  10. thank you so much for providing this, your article is very informational.

    www.n8fan.net

    ReplyDelete
  11. Sods -----
    Law.

    January.----
    2014.

    For almost two
    decades we have strived to get justice for the injustice we have
    suffered at the hands of a world renowned bank--- PICTET & CIE.
    BANK.

    Two yorkshiremen
    both running their own small family businesses trying to resolve the
    problem by taking all the correct legal procedures to recover their
    monies.

    The matter was
    raised in Parliament – twice-- the FSA investigated the matter
    concluding that PICTET had rogues operating in their London Bank ---
    but the rogues had left ---saying no one left to prosecute.??? -----
    so there.

    We then
    approached the Financial Ombudsman Service. (FOS) --- our case was
    dealt with by seven different people ---- then our numerous E-Mails
    were ignored --- nobody would speak to us -------so there.

    We then asked the
    SFO ( Serious Fraud Office.) to investigate our case ---- the
    criteria of our case ticked all their boxes. --- we were instructed
    not to send them any documents/evidence.------ in fact they wrote to
    us advising us to go to the Citizen's Advice Bureau.(CAB.)

    Richard Alderman
    the SFO boss ---- who responded to our letter was the same man who
    would not investigate the “ Madoff” scandal or the “Libor”
    fiasco.

    The MP's
    committee ---- said he was sloppy--- and the SFO was run like “
    Fred Karno's Circus” ------- so there.

    Our M.P.
    approached our local Chief Constable to investigate----- he was
    called---- Sir Norman Bettison--- Chief Constable of West Yorkshire
    Police ---- a force that made “ Dad's Army” look like the S.A.S.
    They were inept – corrupt ---malicious --- from top to bottom. We
    were criminally dealt with by the Forces Solicitor---- the Head of
    the Economic Crime Unit ----and the Chief Constable ----- so there.

    We were then
    advised to pass our complaint against West Yorkshire Police to the
    I.P.C.C. – which we did --- they advised us to make our complaint
    to ---- the West Yorkshire Police --- we did with reluctance --- all
    we got was abuse and obfuscation. ----- so there.

    Sir Norman
    Bettison ---- The Forces solicitor--- and the Head of the Economic
    Crime ---- have all been removed from their posts and facing criminal
    allegations.

    ------ so there.

    We even sought
    justice through the Courts --- culminating in a visit to the Court of
    Appeal-London.--- On leaving the Courts of Appeal that day our
    barrister a “rising star” informed us --- that if that was
    Justice then you can keep it. He quit the law and moved to Canada
    ----- so there.

    A few years later
    we learned that one of the judges in our case at the Court of Appeal
    was related to a senior executive of the Pictet Bank -----so there.

    Pictet & Cie
    .Bank --- voted private bank of the year 2013.

    Ivan Pictet ----
    Voted banker of the year 2012. ---- the senior partner --- lied on
    numerous occasions and had documents destroyed --- also said genuine
    documents were forgeries. ----- so there.

    Ivan Pictet in
    Oct. 2013 ---- Given the Legion of Honour --- but saying that ----
    honours were given to Hitler --- Eichmann --- Mussolini ---Franco
    --- he's in fitting company. ----so there.

    MONTY
    RAPHAEL.Q.C. -- Peters & Peters.London. They were the banks
    lawyers.

    Monty
    Raphael.Q.C. along with Ivan Pictet withheld crucial documents
    requested by the High Court ---- the FSA ---- and the police Fraud
    Squad. ----so there.

    Monty
    Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.

    Monty
    Raphael.Q.C. became a Master of the Bench in Nov.2012.

    An expert in
    Fraud ---the Doyen of Fraud Lawyers. ----- so there.

    This says a lot
    about Banks --- the consensus of opinion is that they are highly paid
    “crooks” ---- no wonder they voted Ivan Pictet banker of the
    year.

    Full Story.----
    “google or Yahoo”

    Insert.

    Ivan
    Pictet.Banker.

    Monty
    Raphael.Q.C.

    Ivan Pictet/Monty
    Raphael.

    ReplyDelete
  12. i have joined your feed and look forward to seeking more of your nifty post.

    www.n8fan.net

    ReplyDelete
  13. Sods -----
    Law.

    January.----
    2014.

    For almost two
    decades we have strived to get justice for the injustice we have
    suffered at the hands of a world renowned bank--- PICTET & CIE.
    BANK.

    Two yorkshiremen
    both running their own small family businesses trying to resolve the
    problem by taking all the correct legal procedures to recover their
    monies.

    The matter was
    raised in Parliament – twice-- the FSA investigated the matter
    concluding that PICTET had rogues operating in their London Bank ---
    but the rogues had left ---saying no one left to prosecute.??? -----
    so there.

    We then
    approached the Financial Ombudsman Service. (FOS) --- our case was
    dealt with by seven different people ---- then our numerous E-Mails
    were ignored --- nobody would speak to us -------so there.

    We then asked the
    SFO ( Serious Fraud Office.) to investigate our case ---- the
    criteria of our case ticked all their boxes. --- we were instructed
    not to send them any documents/evidence.------ in fact they wrote to
    us advising us to go to the Citizen's Advice Bureau.(CAB.)

    Richard Alderman
    the SFO boss ---- who responded to our letter was the same man who
    would not investigate the “ Madoff” scandal or the “Libor”
    fiasco.

    The MP's
    committee ---- said he was sloppy--- and the SFO was run like “
    Fred Karno's Circus” ------- so there.

    Our M.P.
    approached our local Chief Constable to investigate----- he was
    called---- Sir Norman Bettison--- Chief Constable of West Yorkshire
    Police ---- a force that made “ Dad's Army” look like the S.A.S.
    They were inept – corrupt ---malicious --- from top to bottom. We
    were criminally dealt with by the Forces Solicitor---- the Head of
    the Economic Crime Unit ----and the Chief Constable ----- so there.

    We were then
    advised to pass our complaint against West Yorkshire Police to the
    I.P.C.C. – which we did --- they advised us to make our complaint
    to ---- the West Yorkshire Police --- we did with reluctance --- all
    we got was abuse and obfuscation. ----- so there.

    Sir Norman
    Bettison ---- The Forces solicitor--- and the Head of the Economic
    Crime ---- have all been removed from their posts and facing criminal
    allegations.

    ------ so there.

    We even sought
    justice through the Courts --- culminating in a visit to the Court of
    Appeal-London.--- On leaving the Courts of Appeal that day our
    barrister a “rising star” informed us --- that if that was
    Justice then you can keep it. He quit the law and moved to Canada
    ----- so there.

    A few years later
    we learned that one of the judges in our case at the Court of Appeal
    was related to a senior executive of the Pictet Bank -----so there.

    Pictet & Cie
    .Bank --- voted private bank of the year 2013.

    Ivan Pictet ----
    Voted banker of the year 2012. ---- the senior partner --- lied on
    numerous occasions and had documents destroyed --- also said genuine
    documents were forgeries. ----- so there.

    Ivan Pictet in
    Oct. 2013 ---- Given the Legion of Honour --- but saying that ----
    honours were given to Hitler --- Eichmann --- Mussolini ---Franco
    --- he's in fitting company. ----so there.

    MONTY
    RAPHAEL.Q.C. -- Peters & Peters.London. They were the banks
    lawyers.

    Monty
    Raphael.Q.C. along with Ivan Pictet withheld crucial documents
    requested by the High Court ---- the FSA ---- and the police Fraud
    Squad. ----so there.

    Monty
    Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.

    Monty
    Raphael.Q.C. became a Master of the Bench in Nov.2012.

    An expert in
    Fraud ---the Doyen of Fraud Lawyers. ----- so there.

    This says a lot
    about Banks --- the consensus of opinion is that they are highly paid
    “crooks” ---- no wonder they voted Ivan Pictet banker of the
    year.

    Full Story.----
    “google or Yahoo”

    Insert.

    Ivan
    Pictet.Banker.

    Monty
    Raphael.Q.C.

    Ivan Pictet/Monty
    Raphael.

    ReplyDelete
  14. More interesting, though, is the status of the FBAR SOL, e.g., for folks who started complying with their 2008 year. Absent some special exception, the SOL for 2007 (the latest noncompliant year) would be up as of the close of business 6/30/14.

    ReplyDelete
  15. The "F" in FBAR stands for "Foreign". People who do not live in America generally have local accounts. L for local is not F for foreign.

    As such, why does the US government need to threaten and harass individuals with crimes against humanity simply because they have a local checking account in the nation of their allegiance? The US government itself acknowledges that:

    "The country where a dual national is located generally has a stronger claim to that person's allegiance."
    http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies/citizenship-and-dual-nationality/dual-nationality.html

    An individual living in a nation has has the right to not be harassed with national origin discrimination or citizenship status discrimination, both of which are US federal crimes.

    Maybe the US government should abolish dual-nationality to help the US government to become less criminal against the innocent?

    ReplyDelete
  16. @Jack: "... I don't think it will be repealed"

    Okay, but that does not mean that anyone adversely affected by this piss-poor piece of US legislation should meekly sit down and shut up. FATCA is WRONG in the objective sense. It is a bad law that already damaged US interests as well as those of other countries, and its effects will worsen if it is not moderated. Policy laundering and corrupt lawmaking are endemic in congress, but this does mean that they should go unchallenged.

    ReplyDelete
  17. Unfortunately probably correct Jack, but I still have high hopes that it will collapse under its own weight over the next 5 years (cost-benefit realities).
    Sometimes I am not sure if you are a todays version of the "three wise monkeys", when it comes to US tax affairs, the "macro" side of things and their impact on expats, when you speak about tax justice and paying your fair share. How can you stand by and repeat your cynical remarks about expats,FATCA etc. when 10 years ago, Congress passed a law intended to penalize chief executive officers whose companies shift their legal addresses to tax havens...... and you read in 2014 about todays realities with USPs Homelanders and US corporations and their attitudes about paying their fare share ! If I compare HNW Swiss to US, I have to tell you the US client, trust or entity has by far outdone their european counterparties with regards to unethical tax optimization strategies and seizing on loopholes. The "Oscar" goes to the US with regards to criminal creativity and energy.

    http://mobile.bloomberg.com/news/2014-01-27/companies-fleeing-taxes-pay-ceos-extra-as-law-backfires.html

    http://www.bloomberg.com/news/2014-01-27/tax-avoiding-ceos-successfully-avoid-tax-avoidance-tax.html

    ReplyDelete
  18. dear Jack unfortunately I do not know when your birthday is coming up but I would like to send you something for this special day :
    http://www.keepcalm-o-matic.co.uk/p/fatca-fund-america-taxing-canadian-assets/

    ‘America’s Own Onshore Tax Havens’

    Feb 2nd, 2014 By Vicky Dixon

    http://www.moneyinternational.com/tax/americas-onshore-tax-havens/

    “US President Barak Obama needs to look in his back yard to find out
    where some of those missing millions of cash and investments are
    sheltered behind a veil of secrecy.

    …… a small family house in Thomas Avenue, Cheyenne, Wyoming, is a doorway to a hidden financial world.

    ……home of more than 2,000 corporations.

    …..head office of Wyoming Corporate Services. The firm incorporates shell
    companies with shadow directors for anyone who prefers their financial
    affairs remain confidential.

    “…….Obama and the US Treasury have placed a huge amount of pressure on nations considered tax shelters to reform the way they work.

    Banking secrecy in Switzerland was crushed when the Treasury discovered the nation’s financial institutions had actively conspired with US taxpayers
    to help them evade tax.

    FATCA is holding the world’s financial system to a straightforward choice –
    join up and comply or forget trading in the US dollar system.

    Yet the US states of Delaware, Wyoming and Nevada are home to nearly
    700,000 shell corporations owned by individuals and companies from
    around the world which the US Treasury admits are unregulated and easy
    to manipulate as financial shelters.
    FATCA only deals with offshore bank accounts and as these states are mainland America, the law does not apply to them.

    ReplyDelete
  19. QD : amend past return(s) and file delinquent FBAR(s)
    GF : pretend you are in compliance with past returns and file 2013 - 1040 and BSA E-filing FinCEN Form 114 (FBAR) .
    Obviously both options have either possible civil or criminal consequences if and when detected depending on the specific facts and circumstances ("badges of tax fraud")
    If you determine "no interest paid" (has nothing to do with FTCs) on the securities account just amend the FBAR.
    With regards to representation of a minnow on a pro bono basis I am afraid you will be out of luck , since 2009 > 80% of the cases were minnow cases.

    ReplyDelete
  20. sorry but I did not see that.....
    topspin13579@gmail.com

    ReplyDelete
  21. Thanks for your comments. I wonder where the line is crossed with "honest misunderstanding", since it basically stems from a fundamental misunderstanding--I asked my husband for all account information, and he neglected to tell me about his investments. These were not "accounts" in his mind, since they are all traded funds, and just incidentally happen to be held in an account. Also a foreign pension fund. So I proceeded to prepare the tax returns with incomplete information. I'm pretty sure we cross the FATCA thresholds too, so that means amending 2011 & 2012 to add Form 8939. Do we still have a reasonable cause argument? Do cultural differences and/or communication failures count? No tax evasion intended, of course, since all foreign taxes paid. Can anyone recommend a reasonable attorney/accountant team, preferably on the East coast?

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  22. Before you start throwing a lot of money in the direction of tax attorneys, CPAs etc. take the time to educate yourself about your facts and circumstances.
    The key question I asked before is if you have declared in 2011 and 2012 all dividends and interest from those "traded funds" = ETFs which were held in the brokerage account(s) in Schedule B ?
    Were these accounts individual or joint ?
    I speculate from your comments that you are a USP and your husband is a dual or greencard holder ?
    No ,cultural differences and/or communication failures do not count.
    Read the link below to see what the thresholds are for Form 8938 in 2011,12 and see if it applies to you and your husband :
    http://www.irs.gov/Businesses/Corporations/Do-I-need-to-file-Form-8938,-%E2%80%9CStatement-of-Specified-Foreign-Financial-Assets%E2%80%9D%3F

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  23. Yes, I have been spending many late nights trying to understand this fascinating area of law--! You are correct, I am a US citizen and my husband is the long term GCH. To respond to your post:
    1. I don't know yet if dividends/distributions were paid on his investments; he is supposed to be finding out (I've asked him to try to get data for 8 years, since we may need it for OVDP). Assuming there was some income, it was not declared on Schedule B since I wasn't aware of these investment (and I've been the lucky one doing the taxes). By the time the income (if any) is declared and foreign tax credit is claimed via 1116, the net effect should be close to zero (though I gather that matters little to the IRS).
    2. All the investments are individual, in his name only. My one little foreign pension fund falls below the FBAR threshold.
    3. The question of whether we meet the FATCA thresholds for 2011 and 2012 depends on two questions: (a) can we claim the highest threshold since we file jointly and HE (the account holder) resides outside the US (and has a bona fide residence for 2555 purposes), even though I have a US residence (a mixed residency or tax home situation) and (b) do the pension funds have to be reported on FATCA. I realize the prudent approach (advocated by the lawyers I've spoken to so far) is to include "everything"--but this seems to me to call into question our future treatment of the funds as pension, and also potentially takes us over the threshold.
    4. The pensions give me nightmares--I have no idea how to deal with them! The Italy-US tax treaty (just recently ratified, though signed way back in 1999) does not specify which Italian pensions are covered. We both have individual pension funds and my husband has contributions in the semi-private (or quasi-governmental, depending on your point of view) Cassa Forense. I'm assuming the Cassa is easier to exclude, since the government set up this system of professional pension agencies, contributions are mandatory, it is in no way an investment (looks just like social security). The individual fondi pensione are voluntary, though still regulated. In the FATCA Agreement recently

    signed, Italy did specify in Annex II which pension plans the banks are not required to report. But while this may be argument for a taxpayer to exclude the funds from Form 8939, it may also be argued that the Agreement applies only to the reporting banks and not the taxpayer himself. I wish Italy had cleaned up the Income Tax Treaty in this respect!

    5. I still need an accountant's help with the pensions because I can't comprehend the Treaty and have no idea how they should be treated. Anyone with Italian pension experience out there?

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  24. Please forget FTC when it comes to being compliant with regards to Schedule B and Part III . I gather from your response that both of you have never claimed a treaty position on Form 8833 .
    I further assume that we are already talking about monthly distributions to both you and your husband and not employer contributions anymore . Cassa Forense for your husband a.k.a social security or pillar I contributions are covered in the US-Italy tax treaty, for the individual fondi pensione I would advise you to make the relevant elections to invoke the treaty provisions to protect
    you from the IRS and since Forms 3520 and 3520A have not been filed you would be compliant. Keep in mind FBAR thresholds have nothing to do with treaty positions with regards to pension contributions or distributions within your 1040 return.

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  25. There are no pension distributions yet, just contributions. We have filed Form 8833 to claim the non-discrimination benefit (i.e., being able to claim bona fide residence without jeopardizing his green card). If I understand what you are saying, we should file another 8833 to claim the fondi pensione (individual retirement accounts) are covered by the treaty? Would we do this now (in advance of retirement), or what until distributions begin? CAN we claim protection for the individual funds even though Italy did NOT bother to mention them in the treaty (I guess we could be a test case, arguing the same pensions mentioned in the FATCA agreement should be covered by the treaty). Would we also need to claim the treaty benefits for the Cassa Forense, even though this is more governmental (might be safer to simply include it on Form 8833 too)? Do I understand you to say that filing 3520/(A) (grantor foreign trust right?) is incompatible with taking a treaty position with respect to the pension funds?



    Also, good news--I have located a local accountant and attorney who will work together, at a reasonable price, and who are NOT advocating us to go into the OVDP. I'll be meeting with them next week. If I hadn't been doing some research, and reading blogs like this, I might have been scared into the OVDP by the first attorney I spoke to--yikes!

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  26. It was my opinion from the start that you should not enter OVDP.
    I am not sure why you want to involve an attorney at this stage ?
    Normally the "Tax Bermuda Triangle" with Client-CPA-Attorney is anything but "reasonable" and in many cases work is duplicated.
    For whatever you decide to do now - get a firm quote in writing and a detailed (emphasis) description of the work discussed,necessary and agreed upon in your "letter of engagement" with both parties (CPA and tax lawyer) to avoid costly surprises and believe me they do happen.
    Since we are talking about employer contributions only, I would strongly advice you and your husband to make the relevant elections (past,current and future) as discussed before for Cassa Forense (pillar I) & Fondi Pensione (pillar II) to invoke the treaty provisions with regards to IRS provisions 61 and 401 that will be overruled or modified . Although mutual recognition of the foreign pension was not sought out, the recognition of income currently could result in double taxation and unfair and inequitable treatment of you and your husband. In order to seek fair treatment and alleviate the possibility of double taxation due to timing differences in the recognition of income you are invoking Article 18 (Pensions), Article 23 (Relief from double taxation) and Article 24 (Non-discrimination) in order to defer the taxation of your and your husband`s employer pension contributions and yearly growth until either one of you or both receives distributions subject to income tax in Italy.

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  27. $CS added just 175mio CHF ($194mio) in Q4 to provisions with regards to DOJ tax settlement
    (running total $518 now) ..... approx. the same number is expected for 2014 Q1,2 .

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  28. Thanks for sharing your thoughts about economic substances, unfortunately to be honest I dont have any clue about it but with this I gain some nuggets, it help me to be the best Attorney.

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  29. Jack, instead of attacking non-US banks with bigotry and hypocricy, why not focus on US jurisdiction issues? US banks do what you utterly abhor, and that is to hold the customer as being responsible for their taxes:

    "E*TRADE credits and offers may be subject to U.S. withholding taxes and reporting at retail value. Taxes related to these
    credits and offers are the customer's responsibility. "

    https://us.etrade.com/active-trading/alt2?ploc=p-TopNav


    Why don't you attack US financial services with the same level of bigotry that you wrongly export beyond US jurisdiction?

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  30. I participated in OVDI 2011 and opted out of the program in 2012. After opt out I signed the consent agreement to keep open tax years 2007 - 2011 and FBAR for 2005 - 2009. Last month my case has come for examination and the examiner asked for my consent to extend 2006 assessment till end of 2015. She said 2006 is open because I had an account in HSBC India hence the SOL was suspended on Oct 11 due to John Doe summons issued to HSBC. I have a couple of questions:

    1) How do I know that the John Doe specifically applies to me and not to some other class of taxpayer. I could be an innocent bystander.

    2) How do I ascertain that IRS has not received the information from HSBC or from the foreign government under tax treaty guidelines, and

    3) In my case I came forward myself through the voluntary OVDI submission and made available all the information, documents, and bank statements to IRS about all my foreign accounts including the HSBC account. Hence, do not understand why my SOL should be suspended because IRS already has the information from me that is has solicited from HSBC through the John Doe summon.


    What are my chances of arguing this in appeals?

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  31. 1. I think it would be fair for you to ask for the documents establishing that your deposit was covered by the JDS.
    2. Again, ask if that is relevant to the action the IRS is asking that you take.
    3. If the requirements of the statute suspension are met, I don't think it matters that the IRS may have had your documents.


    One thing to consider is that, by opting out, you submitted yourself to the regular audit regime. Under the regular audit regime, Congress has said that taxpayers are not required to give consents to extend the statute of limitations. In other words, provided you gave all the requested extensions before you opted out, I am not sure you have any obligation to give consents or downside if you do not give consents. You should not have opted out if you had exposure for income tax fraud or FBAR willfulness. Hence, focusing on the income tax, there should be no unlimited statute of limitations and you should get the result the IRS can assert on audit. If you do not give the consents, what can the IRS do? Kick you out and audit you? That's what is happening anyway. I suppose the IRS could punish you by asserting civil fraud even though it has no case for fraud. Given the procedures required before the IRS can assert civil fraud, I doubt that that would happen. So, I am back to the position that, basically, you are in an audit and Congress has said clearly that you do not have to give consents in an audit.


    Jack Townsend

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  32. Jack, thanks for the response, I pushed back on consenting to extend the deadline for 2006 and IRS agreed that they do not need my consent to keep 2006 open due to the suspension of SOL.


    I have not received any documentation and no notices were sent to me previously to convey the suspension of my statute, is there any ground under which I can appeal against the opening up of a closed year for assessment?



    Is it considered acceptable for the IRS to indefinitely suspend a taxpayers statute even if it has received the information it was seeking in the first place through John Doe?

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  33. OptedOut. If you joined the OVDP prior to the John Doe summons, I believe you do not fall into suspended SOL. The suspended SOL is meant to capture people that did not come forward and have been trying to wait out the system before getting caught. If you came forward and declared your HSBC India account, before the John Doe summons I don't think the IRS can touch you or force you to include closed years. If this were the case then cases that closed prior to the John Doe summons could be reopened by the IRS. I would fight this tooth and nail and I would never sign another extension as Jack suggests. The people entering the 2014 OVDP who have accounts cited under the John Doe, are on notice that fines will be assessed at 50% of account balances associated with those Banks, but if you had accounts in those banks and entered the OVDP prior to the John Doe summons being issued, I think you have a very good case of telling the IRS you are exempt from the John Doe summons.

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  34. I have blogged on this a couple of times before. The applicable Code section is 7609(e)(2), here:

    http://www.law.cornell.edu/uscode/text/26/7609

    My blogs on this (including the one for this comment) are here:

    http://federaltaxcrimes.blogspot.com/search/label/7609%28e%29%282%29

    I don't think the statute suspension depends upon whether the IRS has the information and/or documents before the suspension starts or stops the suspension once obtained from anyone other than the summonsee.

    I know that is not the answer you want, but I think the Courts would read the statute literally rather than engraft a suspension as to any taxpayer where the IRS already has or obtains the information and/or documents.

    Moreover, there is no requirement that the IRS give notice to the taxpayer. Section 7609(i)(4) requires that the summonsed party (HSBC) give notice to the taxpayer of the suspension of the statute of limitations. That may give rise to a complaint to HSBC or, possibly (but I doubt it), a suit against HSBC for not giving the statutorily required notice. But HSBC's dereliction of the statutory duty will not lift the suspension of the statute of limitations.



    Jack Townsend

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  35. The statute creating the suspension does not make the distinction you make. The statute is Section 7609(e)(2) which can be viewed here:

    http://www.law.cornell.edu/uscode/text/26/7609

    Of course, it is true that the purpose of the suspension is to permit the IRS to have the information or documents before the statute of limitations runs out. But Congress drew the statute more broadly, perhaps in order to foreclose arguments about what the IRS knew and when it knew it.

    Jack Townsend

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  36. Opted out: is the IRS saying that the SOL on FBAR penalty is open for all your accounts in 2006, or just your HSBC India account? I ask this because if you had other foreign accounts in other Banks not covered by the John Doe summons are they excluded because the there is no suspension on the Banks where these other accounts are held.?

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  37. Jack I went back and read the John Doe summons. The purpose of the summons is to discover account holders at HSBC India between x date and x date that have not complied with IRS regulations at the time the John Doe is executed. Opted Out clearly had account between x date and x date, but he disclosed those accounts and came into compliance before the John Doe summons was executed. Therefore I don't see how he could get caught up in the suspension.

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  38. OptedOut. I just re-read your comment. You said you opted out of the 2011 OVDP in 2012 and just last month your case has come up for examination. Are you saying that it took 2 years from opt out, before the IRS even contacted you regarding an examination? Was there no contact or legal expenses incurred in this time period ? Jack in your experience have most opt outs had to wait 2 years before their audit and examinations have begun?

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  39. My opt outs have not waited nearly that long. Of course, he should have been contacted during that period to renew the consents to extend the statutes of limitations.

    Jack Townsend

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  40. Blackseal1234,

    You have to look at the description in the summons itself, not in a statement of the purpose of the summons. Of course, the IRS only really needed the depositors that had not already come into compliance, but since the bank would not know, except in some cases, which taxpayers had come into compliance, I suspect that the actual summons command was for all U.S. depositors. I do not recall that the actual summons. But I think that OptedOut should demand to see it to insure that he is within the scope of the actual summons. Moreover, as I noted, in any event, OptedOut might decline the request for a statute extension anyway.

    Jack Townsend

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  41. The Section 7609(e)(2) extension applies to the entire return and not just the portion of the return that might be affected by the John Doe Summons. Also, keep in mind that 7609(e)(2) does not affect the FBAR statute of limitations; it only affects the income tax statute of limitations.

    Jack Townsend

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  42. Blackseal1234, I joined the OVDI just after the John Doe summons were issued to HSBC. Infact that's what brought FBAR reporting requirements to my awareness. Apparently, HSBC sent a letter to its US account holders informing about John Doe and in it was included the link to OVDI. After getting the letter in June 2012 I spent the next two days researching on the internet and was horrified to find out about my mistake and within a week I was in the voluntary program. The suspension of SOL is effective 6 months after the summon and by then all my account statements had been made available to IRS.

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  43. Blackseal1234: 2006 is open for FBAR but closed for tax. IRS is saying that 2006 is open for tax and I assume for all accounts.

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  44. Blackseal1234 and Jack, yes it was a 2 year wait but in the meantime I was asked to renew the consent to extend the SOL.

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  45. Jack, how many JDS do we have up to now ?
    2008 - UBS
    2011 - HSBC
    2013 - FCIB
    2013 - UBS II with regards to Wegelin

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  46. correction : 2006 and 2007 years are closed years with regards to FBAR.
    JDS does not affect the FBAR statute of limitations

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  47. In the case of UBS the turnover of the documents was made under the U.S. Swiss double tax
    treaty, not pursuant to the JDS which was ultimately dismissed for
    reasons having nothing to do with responsivenss. Does and should that
    make a difference? Can the argument be made that the U.S. knew that it
    could not get compliance with the JDS and merely used it as a threat /
    pretext to encourage the Swiss to respond to the treaty request? Is it
    clear that this the double tax treaty request would invoke 18 U.S.C. §
    3292, e, providing for suspensions during the period a request for information from a foreign country is outstanding?

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  48. 2006 and 2007 are closed years with regards to FBAR and open for income tax due to JDS

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  49. Yes Blackseal you could break the record and go for 5 years until everything is over !

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  50. Jack and OptedOUT , knowing that the that 7609(e)(2) does not affect the FBAR statute of limitations; it only affects the income tax statute of limitations is a great relief. One would assume that anyone entering the OVDP has done a fairly good job on their amended returns, and would not be too bothered by having their tax return open for audit. Having your FBAR penalties open indefinitely is frightening because of the possibity of multiple year penalties. So to be clear the IRS is not saying your FBAR SOL is suspended because of your account at HSBC India. Correct?

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  51. I think you are saying that one should not let the agent leverage an FBAR extension from the suspension of the SOL for JDS in an income tax context. I agree.

    Jack Townsend

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  52. An example of pretexts that ultimately defeat IRS claims is the case of United States v. Gertner, 65 F.3d 963 (1st Cir. 1995), here:

    https://casetext.com/case/us-v-gertner

    Literally, the suspension is from six months after service of the summons until "the final resolution of such response." So, literally, there is nothing to prevent the suspension. But, taking the cue from the Gertner case, one could make the argument you suggest that the JDS was pretext because the Government knew it would not get anything from the JDS. Of course, the existence of the JDS contributed to the treaty basis for the information and documents. So I don't know where that will go, but someone, sometime may want to launch the pretext argument in negotiations with the IRS or in litigation if necessary.

    Jack Townsend

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  53. GlobalCapitalism- I love your sense of humor!!

    ReplyDelete

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