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New Investigation Into Swiss Banks May Affect San Diego Residents With Certain Unreported Foreign Securities

New Investigation Into Swiss Banks May Affect San Diego Residents With Certain Unreported Foreign Securities

In 2009, Swiss banking institution UBS agreed to pay the United States government about $780 million for its role in helping American citizens hide assets overseas in order to avoid paying U.S. federal income taxes. The case also resulted in the voluntary disclosure of previously unreported offshore assets by thousands of U.S. citizens. As a result of the legal battle, the Swiss Parliament ultimately approved a measure that allows banking institutions operating within the nation to disclose the existence of financial accounts that are held by American taxpayers without simultaneously violating the country’s bank-secrecy laws.


Recently, the U.S. began a new investigation into UBS regarding whether the financial institution assisted Americans with purchasing bearer bonds and other securities that are illegal in the States. The U.S. government apparently believes UBS workers used the securities, which transfer like cash, in an effort to assist Americans with evading their income tax liabilities.


The ongoing investigation was launched at a time when UBS and other banks were scrambling to comply with the new Foreign Account Tax Compliance Act (“FATCA”). The U.S. law mandates that banking institutions around the world turn over financial data related to accounts that are owned by U.S. citizens or risk being frozen out of the American marketplace. More than 100 Swiss banks are reportedly now complying with the recent law.


Despite the investigation, it is unclear whether the U.S. will prevail on its new claims against UBS. In 2013, the top UBS banker was found not guilty of committing tax evasion for his alleged role in assisting Americans with hiding financial assets overseas. Other UBS bankers apparently received probation based on similar allegations.


In an effort to reduce their liability, many U.S. taxpayers with unreported overseas assets have opted to participate in the Offshore Voluntary Disclosure Program (“OVDP”). Under the program, over 50,000 Americans have remitted about $7 billion in unpaid federal income taxes and penalties.  Currently, the OVDP levies a 27.5 percent penalty on the highest account balance of each offshore financial asset that an American taxpayer willfully chooses not to disclose on his or her U.S. federal income tax return. Since the FATCA took effect, the number of voluntary disclosures made under the OVDP has risen dramatically because the program compels American citizens who fail to reveal foreign banking assets held at an offshore financial institution that is publicly identified as being under investigation or cooperating with a U.S. investigation to pay a penalty of one-half of the bank account’s highest value.


Successfully navigating the Internal Revenue Code on your own can be tough. Certified tax law specialist William Hartsock has more than three decades of experience representing clients in San Diego who have been accused of tax evasion and other tax-related crimes. To speak with a seasoned international tax lawyer, call Mr. Hartsock today at (858) 481-4844 or contact him through his website.


Additional Resources:

New UBS Tax Evasion Probe, Again Over Americans, by Robert W. Wood, Forbes



Photo Credit: ariadna, MorgueFile

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