In case there was any doubt, the Justice Department program aimed at securing agreements with Swiss banks to obtain U.S. taxpayer information is an IRS tool to pursue those who have unreported income from Swiss bank accounts. Last week at the 26th Annual Institute on Current Issues in International Taxation, IRS Deputy Commissioner Michael Danilack was quoted as saying:
“We believe the DOJ program will provide us with more information to pursue U.S. taxpayers who continue to hide their assets in offshore accounts, and we believe a path to closure has been provided to those Swiss banks meeting the requirements of the DOJ program and agreeing to comply with the Swiss [intergovernmental agreement under the Foreign Account Tax Compliance Act].”
See IRS ‘Not Sitting on the Sidelines’ for DOJ Program on Bank Disclosures, by Alison Bennett (Bloomberg BNA, Dec. 17, 2013) [here with BNA subscription].
Under FATCA and this program, the IRS will have access to previously secret taxpayer account information, and the consequences of this will surely be more IRS investigations with respect to those U.S. taxpayers. According to Mr. Danilack,
“IRS’s primary interest is, and has always been, in ensuring that U.S. taxpayers with accounts in Swiss banks are complying with our laws and paying the appropriate amount of U.S. tax.”
There are roughly 300 banks in Switzerland, and to date, nineteen Swiss banks have publicly disclosed their intention to participate in the program. These banks are Raiffeisen, Valiant Bank, Vontobel, Migros Bank, Bank Coop, PostFinance, and the cantonal banks of Bern, Geneva, Glarus, Zug, Schwyz, Aargau, Appenzell, Vaud, St. Gallen, Nidwalden, Graubünden, Obwalden, and Lucerne. There may be others; banks are not required to publicly disclose their participation in the program.
It has been well-publicized that the program has an initial deadline of December 31. Following that deadline, participating Swiss banks that are seeking a non-prosecution agreement with the DOJ have a period of 120 to 180 days to meet certain program requirements. [See detail here.] Once those requirements are met and a non-prosecution agreement is executed, the Swiss bank will then begin disclosing U.S. taxpayer account information.