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Swiss Banks Encourage Use of OVDP

Posted in Offshore Account Update on August 12, 2016 | Share

Swiss banks have taken advantage of their namesake program, The Swiss Bank Program. This program provides amnesty to financial institutions from criminal prosecution if the banks take certain actions, like pay fines and turn over accountholder info. Banks are increasingly signing on, betraying their customers by giving the IRS extensive details about accounts.

Banks participating in the Swiss Bank program is not the only thing that financial institutions are doing which could be bad for accountholders. Some Swiss banks have also sent letters to accountholders urging them to enter an Offshore Voluntary Disclosure Program (OVDP.) While OVDP is the right choice for some people with undeclared offshore funds, it is definitely not the best solution for everyone.

Instead of listening to your bank, you need to get proper legal advice on how best to protect your own interests. A Washington DC tax law firm should be consulted for help to determine if you are at risk of financial penalties and to find out your options.

Banks Urging Accountholders to Participate in OVDP

Letters sent by Swiss banks to accountholders tout the benefits of OVDP, which include significantly lower civil penalties than if disclosure does not occur and the ability to avoid the threat of being prosecuted criminally for tax crimes.  Some banks also warn that, while no end date or pending modifications have been announced, the IRS could still modify or end OVDP any time.

While some of these facts are at least partly true, the letters the Swiss banks are sending do not tell the whole story, First, the letters do not clarify all of the financial consequences of OVDP participation.  

Accountholders who report they had undeclared offshore funds must also pay a percentage of the highest balance in the offshore Swiss account over the prior eight years.  If the bank where the offshore funds are held is under scrutiny by the IRS already, miscellaneous offshore account penalties as high as 50 percent could be assessed. Amended returns are required as well, which must detail income generated by the previously undeclared Swiss account. This income is taxed, a 20 percent accuracy penalty is assessed, and interest is charged.

Banks may overestimate advantages of OVDP and underestimate these significant downsides because it is in the best interests of Swiss banks to get their accountholders to confess the existence of offshore accounts to the IRS.

Swiss banks have a long track record of helping clients to shield money from the IRS and to shield income from taxes. However, now that the IRS and Department of Justice are coming after Swiss Banks with threats of prosecution, the banks want to be seen as cooperating. Sending letters urging clients with offshore funds to confess could be part of the bank's ploy to get a non-prosecution agreement from the Department of Justice.

You need not take advice from your bank when substantial amounts of money could be at stake and the bank may be focused on its own needs. Contact Kevin Thorn to find out what your best course of action is when you have undeclared offshore funds.


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"Mr. Thorn and the attorneys at Thorn Law Group were so knowledgeable about the IRS Voluntary Disclosure Program and about the way the IRS Criminal Investigation Division works. Mr. Thorn helped put my mind at ease and walked me through the whole Voluntary Disclosure process. With the help of Thorn Law Group, and Mr. Thorn specifically, we were able to get back into compliance and were able to avoid criminal prosecution."