Beware Of Letters From Your Foreign Bank Seeking Information On Your U.S. Residency

Posted in Press Releases on August 28, 2014 | Share

Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses the recent onslaught of U.S. taxpayers with foreign bank accounts who are receiving letters from their foreign banks in order requiring the account holders provide the bank with information about their U.S. connections.

Washington, DC (PRWEB) August 28, 2014 - A new trend in the offshore banking regime has emerged. Many banks located around the world are sending letters to their accountholders seeking personal information to confirm whether the account holder is a U.S. citizen or a U.S. resident. In the letters, the banks typically say they are required to obtain this information in order to comply with FATCA.

On July 1, 2014, the Foreign Account Tax Compliance Act (“FATCA”) went into effect. {IRS Notice 2013-43,} FATCA demands that foreign banks turn over information on all U.S. account holders to the United States government. Banks that do not cooperate are penalized with a 30 percent withholding tax on payments from U.S. sources. {IRS Notice 2013-43,}.

The streamlined procedures are an alternative to the IRS OVDP for taxpayers with undisclosed foreign accounts. Once a taxpayer makes a submission under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, the taxpayer may not participate in the regular OVDP. Similarly, a taxpayer who submits an OVDP voluntary disclosure letter to enter the regular OVDP is not eligible to participate in the streamlined procedures.

Kevin E. Thorn of Thorn Law Group notes that these are different from the letters accountholders have been receiving from banks in Switzerland. Thorn observed that he has seen letters from many Swiss banks sent to U.S. accountholders requesting personal information and directly informing the accountholders that the bank has affirmatively agreed to turn over account information to the IRS. Thorn notes that in those letters, the Swiss banks advise the U.S. accountholders to enter the IRS Offshore Voluntary Disclosure Program and often require evidence from the accountholders that they have or are currently participating in the Voluntary Disclosure program.

“By comparison,” says Thorn, “the bank letters we are seeing now are a softer tone, generally informing the account holder that the account information may be disclosed to the IRS as necessary under FATCA and advising the accountholder to discuss their situation with a U.S. tax professional to ensure they are compliant with U.S. reporting obligations related to the foreign account.”

“These new bank letters are serving as a wake-up call for many and a reminder that U.S. persons are required to report all their foreign bank accounts and assets regardless of where outside the U.S. they are located,” states Thorn. “I have spoken with many taxpayers who did not know about their reporting requirements until they received this letter, or who thought the OVDP was just for U.S. persons with Swiss accounts.” Thorn adds, “ if someone has an undeclared overseas account at a foreign bank and has received a letter from their overseas bank they should come forward and get back into compliance now.” Thorn observes that, “FATCA applies to nearly every foreign bank; this letter may be your only warning before an IRS investigation takes place. Once the Department of Justice or IRS starts an investigation, the U.S. taxpayer will not be able to disclose without paying a steep penalty or possibly even facing criminal prosecution.”

Thorn also observes that, “the account information the DOJ has and continues to receive from foreign banks and others has allowed the U.S. government to identify and prosecute American taxpayers with undisclosed foreign accounts faster than ever before, and the list of banks cooperating with the U.S. government is continually growing.”

Kevin E. Thorn, recommends that U.S. taxpayers with undisclosed overseas accounts enter into the IRS's Offshore Voluntary Disclosure program in order to avoid the 50% penalty on each undisclosed account and possible criminal prosecution. “Foreign banks are cooperating with the IRS to avoid penalties and fines and so should U.S. taxpayers with undisclosed foreign bank accounts”. He adds, “U.S. taxpayers with undisclosed overseas accounts contact an experienced tax attorney as soon as possible in order to discuss their rights and options.”

For additional information on the news that is the subject of this release, contact Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-270-7273 or visit us at

About Thorn Law Group, PLLC: Thorn Law Group, PLLC is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.

Kevin E. Thorn
Managing Partner Thorn Law Group, PLLC

Thorn Law Group

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