This blog was last updated on June 27, 2021
On Wednesday, January 27th, the US Justice Department announced that it had reached its final non-prosecution agreement under Category 2 of its Swiss Bank Program, this completing the Swiss Bank Program phase 2. The NPA was signed with HSZH, a one-time UBS acquisition. The Department of Justice (DOJ) launched its Swiss Bank Program in August 2013 to combat tax evasion. The Program provides a pathway for Swiss banks to resolve potential criminal liabilities in the US. The Program is only eligible for banks who were not already under criminal investigation, but the DOJ still had reason to believe that they had committed tax related criminal offenses in connection with undeclared US-related accounts. As part of the Program, banks are required to assist the DOJ in its investigation into tax evasion and to pay appropriate penalties. The completion of the Category 2 of the Swiss Bank Program is significant. The Program has imposed more than $1.3 billion in penalties from 80 banks. The DOJ plans to use the information it has gathered to further combat tax evasion. A Good Time to Disclose Furthermore, those with accounts in foreign financial institutions, who haven’t disclosed their assets, can do so through a couple of programs. The penalties may be costly, but they are certainly better than prosecution. The Swiss Bank Program also coincides with the IRS’s Offshore Voluntary Disclosure Program, which offers amnesty on even willful acts of tax evasion. The IRS has a list of 94 foreign banks where an OVDA filing triggers an automatic 50 percent penalty. Forbes contributor Robert W. Wood explained that the penalty is based on the highest account balance over a designated period, up to eight years. Banks not on the IRS list carry a 27.5 percent penalty. The IRS’s streamlined program is simpler and carries less of a penalty. However, in order to qualify, account holders must demonstrate they did not willfully withhold assets. Global financial transparency has taken on added significance over the last decade. American corporations with holdings overseas are under increased pressure to account for all such assets so they do not run afoul of the law, especially with the introduction of FATCA and these other programs. With the help of international tax reporting processes such as Sovos AEOI, corporations and organizations can have peace of mind knowing that they will be fully tax compliant and free from penalty.
