Overseas Bank Accounts – IRS is Actively Searching

Overseas Bank Accounts – IRS is Actively Searching


These are not the days to have a non-disclosed overseas bank account. If you do have such an overseas bank account, you are in for mighty rough sailing. For decades, you could count on foreign banks and the Swiss keeping secret account from the prying eyes of all interested governments. The American government tried to penetrate the wall of silence holding these secret accounts, and for years the government failed in its quest. It’s all changed now. The IRS went to court against the Union Bank of Switzerland, also known as UBS in an attempt to force the huge European bank to disclose the accounts, and more importantly the names of American citizens holding overseas bank accounts.

Thousands of Americans maintain overseas bank account(s) illegally. It is not the holding of such an account that is illegal. It’s the non-disclosure to the Internal Revenue Service that constitutes illegality. Every year your tax form contains a provision with a box that requires checking if you maintain an overseas bank account. If you do have such an account, and you don’t check the box, you are in violation. The number of Americans with legal foreign accounts is in the hundreds of thousands. As long as you properly disclose their existence to the IRS, and report any associated income from such accounts, you’re fine.

UBS shocked the holders of these accounts by agreeing to give up the names of several hundred of the account holders. The names given up were those which the bank believes are guilty of criminal behavior. You are making a calculated gamble if you are such a holder. The number of Americans having such accounts at UBS alone are in the range of 50,000 plus. The bank is giving up only 250 accounts to start begin with. Are you one of the 250 to be handed over to the government, or are you one of the remaining 50,000? That’s the gamble you are taking, and what a gamble it is.

A formal IRS government disclosure program has been created. It allows you to reveal your identity to the IRS until September 23rd. In exchange for your voluntary compliance, the government will probably not pursue criminal actions against you. Such charges would result in a jail sentence. Clemency is the rule of the day and certain fines would be voided. If however, you decide to wait until after the deadline, or if the government should find you first perhaps as a result of the accounts handed over, this could develop into a nightmare you don’t want to have. The IRS does can employ its powers which includes liens, arrests, confiscations and a whole set of actions we are better off not knowing.

By merely having an overseas bank account you are not in violation. By not revealing the existence of the account to the IRS, this is what results in violation. Again, it is the non-disclosure of the account to the IRS that creates the violation. There are hundreds of thousands of Americans with legal overseas accounts. To remain within the law, they properly check the box on their tax forms noting the existence of such accounts, and they pay taxes on any and all income generated by such accounts.

The government assumes that you have other motives for maintaining such an overseas account if you allow yourself to be non-disclosed. As an example, there is the issue of where the funds came from and why are you covering up their existence. Were the funds in the account obtained illegally. If the government finds the account and subsequently contacts you, you are opening yourself up to a full investigation, and examination of your complete financial picture – sometimes called a lifestyle audit.

It’s this simple, if you have an overseas account that is non-disclosed, you probably should reach out and retain a sophisticated CPA or tax attorney. If you feel your case has real complexity, and that criminal prosecution could result, consider working with a criminal tax attorney. What you don’t want to wait on this and do nothing. Time is not on your side. Find a legal representative and deal with the problem. Let him act as your contact with the IRS. The alternative of interacting yourself, or doing nothing is not an alternative at all.

This is just the beginning

The IRS has brought a Civil court case against UBS, the Union Bank of Switzerland. This is the case that has caused UBS to released the names of 250 American holders of secret bank accounts. Concurrently with this case, the United States Justice department is attempting to force the very same bank to disclose its entire client list which we believe numbers over 50,000 Americans.

The government also wants UBS to turn over the names of everybody who was involved with the creation of these accounts to begin with. In other words, who were the introducing attorneys, tax accountants, financial advisors, or just plain promoters who helped these people get foreign bank accounts. These accounts are considered to be tax evasion schemes, and they don’t come out of thin air.

If the government is successful in getting the names of these purveyors or enablers who helped to create the illegal foreign bank accounts, than this will also lead to criminal prosecution of such individuals and firms who are involved. Such individuals will not be under the protection of Swiss bank secrecy laws, which don’t seem to be so secret anymore. Here’s the key to this matter. Let’s say the government gets a hold of the names of key players involved with the creation of the accounts. Very few account holders got the idea themselves to walk into the Union Bank of Switzerland office near them and open up an account. There is usually an intermediary who performs this function. Such a person or entity would have an entire list of clients who were active in this process. That list is subject to subpoena, and you can bet that the intermediary would turn it right over to the government in an attempt to lessen their own problems.

Now at UBS, there were bank officers who were active in the creation of these accounts. They are and have been penalized, but we believe the vast majority of such individuals are outside the bank, and independent operators such as tax program creators, attorneys, CPA’s and other promoter types. The first domino to fall is former UBS banker, Bradley Birkenfeld. In exchange for a lighter sentence, he is singing like a canary, and telling the government everything and everyone he knows about the program. There will be others.

Is UBS just the beginning????

We think so. It is our contention that UBS is being used as the cornerstone of a program to get others into a compliance mode. The American government is going to use UBS to flush out other banks who are doing the same thing. At the very least, this is going to discourage other banks from helping Americans to defraud the Internal Revenue Service.

A different way of explaining this is that the IRS – UBS civil case is nothing more or less than a blue print for the IRS to follow in attacking other banks, and forcing them into capitulation when it comes to off shore banking accounts.

Some are being Prosecuted!!!

The IRS has the names of 250 account holders of Illegal UBS accounts. The government has begun criminal prosecution of over 150 of these holders. The government probably feels compelled to do this, in order demonstrate a get tough policy which in turn will force other individuals to come forward and face the music. This is just the beginning of an IRS project that is going to take years to come to fruition.
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