tag:blogger.com,1999:blog-1519969502186924526.post2641611991347047415..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: Swiss Banks Scramble to Mitigate U.S. Penalties (4/17/15)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-1519969502186924526.post-34534122129257480822015-04-27T08:32:52.917-05:002015-04-27T08:32:52.917-05:00Dolphin, thanks for your comment. I suspect that ...Dolphin, thanks for your comment. I suspect that Mr. Millard's move to the Commonwealth of the Northern Mariana Islands (CNMI) was occasioned by CNMI's double tax regime (piggybacked on Guam's) which, in effect, said that, if a U.S. citizen were a resident of CNMI, he would file a single tax return each year with CNMI (and not the U.S.) and would calculate his gross tax liability the same way. The tax gambit of CNMI residence was that the person could then get a 95% rebate on income sourced anywhere other than in the U.S. I saw that deal promoted by Arthur Andersen to a number of wealthy clients of AA, and actually litigated one of them. I have written on this before:<br /><br />http://federaltaxprocedure.blogspot.com/2013/05/the-mirror-code-concept-some-thoughts.html<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-70435488422568576972015-04-26T10:33:32.121-05:002015-04-26T10:33:32.121-05:00A month ago a Zurich court ruled against a Swiss b...A month ago a Zurich court ruled against a Swiss bank.<br />William H Millard faced a $118 million tax bill from the Northern Mariana Islands (a US possession.) Credit Suisse/Clariden Leu negotiated directly with the Marian gov't and agreed to pay $1.4 million to get itself off the hook, all this without informing Mr. Millard. The bank then tried to get Mr. M to reimburse it for the $1.4 m plus a few hundred thousand in legal expenses. The court ruled against the bank.<br />There are interesting parallels between this case and Swiss banks' negotiations with the IRS.<br />Sources (in French and German, the German more thorough)<br />http://www.letemps.ch/Page/Uuid/daaf22cc-d255-11e4-9f2b-2a6998eb792a/La_justice_zurichoise_donne_tort_%C3%A0_Credit_Suisse_qui_avait_bloqu%C3%A9_le_compte_dun_Am%C3%A9ricain<br /><br />http://www.nzz.ch/wirtschaft/cs-haette-konto-nicht-einfrieren-duerfen-1.18508244Dolphinnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-89871271544332249602015-04-26T10:24:37.087-05:002015-04-26T10:24:37.087-05:00In any negotiation with the bank keep in mind that...In any negotiation with the bank keep in mind that any legal fee reimbursement will be taxable to you (if you deducted it previously.) ou could try to ask for accounting fees also. <br />I am curious as to how people would ensure they get paid. Escrow account with a lawyer?Dolphinnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-41939461328595748922015-04-21T10:02:19.638-05:002015-04-21T10:02:19.638-05:00Addendum: to my knowledge, Swiss bans are allowed ...Addendum: to my knowledge, Swiss bans are allowed to block the entire account on their own initiative, but only for three days, to give the Swiss government time to act on the bank's suspicions. If the government doesn't act to impose its own freeze, the funds must be released.DRnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-84793152544494007852015-04-21T09:59:50.119-05:002015-04-21T09:59:50.119-05:00Asher, I wonder whether the offer varies depending...Asher, I wonder whether the offer varies depending on account balance? $25K reimbursement on a $100K account would be 25%, which is greater than the bank's savings of 20%. On the other hand, on a $1M account, 25K is only 2.5% which seems a paltry offer in relaion to 200K in savings to the bank.<br />By the way, professors have done game theory studies on this type of situation. Two people are ffered $20 which they can split between them in any way that both agree. If there is no agreement, each gets nothing. It was found that agreements at 50/50 or near that (60/40 or 40/60) worked, but that if the parties were too far apart (90/10 split fr example) one party though that he was better off with both getting nothing than he getting 10% and the other party 90%.DRnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-77295615090699231192015-04-19T11:43:16.176-05:002015-04-19T11:43:16.176-05:00If the banks are scrambling to get permission to r...If the banks are scrambling to get permission to release client data and offering tens of thousands of dollars for that permission, they darn well know that 1) they need the client's permission to release it and 2) that the signed release has a value to them significantly greater than what they offer to pay.<br />Therefore, I would contend that a bank releasing client data without permission knows it is breaking the law and is doing so for financial gain, therefore setting itself up to be sued. Keep in mind that many of these clients have disclosed the acounts through OVDI or otherwise and havo no fear of filing a lawsuit.<br />Don't know whether such a suit can be tried in the US, or whether Switzerland allowscalss action suits, but it seems like an opportunity for enterprising lawyers.DRnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-38244550077163999652015-04-19T11:36:44.494-05:002015-04-19T11:36:44.494-05:00I am not familiar with Swiss law but I would expec...I am not familiar with Swiss law but I would expect that the bank has no legal basis for refusing to release funds or assets in custody. The only exception is a CD or savings account whih tpically has a notice period (in practice usually waived if the customer useds the funds to buy other assets within the bank account. In practice also banks will charge an interest penalty for premature withdrawal. But these rules I would expect wuld need to be applied to all customers across the board. Otherwise I believe that a bank refusing to release funds is considered bankrupt. At last I believe that is the aw in the US. Savings passbooks in the US typically used to have a small print notice that advance notification was required before making substantial withdrawals, though in practice I don't know of that being enfrced. In any case, I believe that threatening to withhold funds or reveal the client's information would be considered blackmail under US law.DRnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-15953954563622231192015-04-17T09:00:12.044-05:002015-04-17T09:00:12.044-05:00Within the last few days, I have seen a push by Sw...Within the last few days, I have seen a push by Swiss banks to offer to reimburse my clients for their legal fees in bringing their accounts into US tax compliance. Seems that it is a logical business decision on the part of the bank: if the amount reimbursed to the client results in a penalty savings greater than the amount reimbursed, that would be of benefit to the bank. The bank, in return for the reimbursement, would seek the client's written agreement, W-9 form and copy of the Form 906. I'll also note that at least one bank, which previously rejected any client reimbursement, is now quite keen on getting the clients' cooperation.Asher Rubinsteinhttp://www.assetlawyer.com/noreply@blogger.com