106 Swiss Banks Enroll in DOJ Program; The Clock is Ticking for Taxpayer Amnesty on Undeclared Swiss Bank Accounts

We have reported on the Justice Department’s program offered to Swiss banks and targeted to identifying U.S. taxpayers that have not disclosed foreign accounts to the IRS.  [See prior posts here, here and here].  It has now been reported that one-third of all Swiss banks applied to the program.  [See Swiss Banks Seek Tax Amnesty as Third Accept U.S. Offer, Bloomberg News, by David Voreacos; DOJ Tax AAG Keneally Reports on Swiss Banks Joining DOJ Swiss Bank Program (1/27/14), Federal Tax Crimes, by Jack Townsend].  With this level of participation, the DOJ likely would view the program as a success.

Kathryn Keneally, Assistant Attorney General for the Tax Division, disclosed at an ABA conference in Phoenix this weekend that 106 Swiss banks applied to the program.  The scope of the program had previously been unknown.  Swiss banks had until December 31 to apply to the program, and as of that date, only 30 or 40 banks had publicly declared that they had applied.  However, the program did not require that a participating bank make a public disclosure about its application status.  At the conference, Attorney Keneally told attendants that the DOJ viewed every bank in the program as a new source of information and would pursue leads whether the funds in the accounts went to other Swiss banks or to banks in other countries. 

Also as we have reported here previously, U.S. taxpayers who have or had any kind of interest in an unreported Swiss bank account should strongly consider disclosing that account now through the IRS Offshore Voluntary Disclosure Program (OVDP).  The OVDP is a voluntary compliance initiative whereby individuals can receive amnesty from criminal prosecution for their previously unreported offshore bank accounts in exchange for filing amended tax returns and FBARs, and paying all back taxes, interest, and penalties.  Because of additional swift deadlines set in this program, taxpayers must act quickly.  A participating Swiss bank has only 120 days from December 31, 2013 (with one potential 60-day extension) before it must begin to turn over account information to the DOJ.  Once the DOJ receives information about such an account holder, s/he is no longer eligible for the OVDP and may have to resolve any tax-related issues in another, potentially more expensive or litigious, manner.

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