Offshore Bank Letter Evidence of Willfulness

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Swiss banking giant CreditSuisse AG announced that it would comply with a U.S. information request and provide information through the Swiss Federal Tax Authority (SFTA) to the IRS. The bank sent letters to U.S. persons account holders advising them of the intention to comply and their appeal rights. Persons receiving this notice face a choice, either come forward and possibly be eligible for the Offshore Voluntary Disclosure Initiative 2012 (OVDI) or face the likely assertion by the IRS that their conduct was “willful” and be subject to the civil “willfulness penalty” of $100,000 or 50% or the account balance per account per year and/or risk criminal prosecution. The Internal Revenue Manual provide some guidance on how agents will act once the IRS receives a report from CreditSuisse.

“A person received a warning letter informing him of the FBAR filing requirement, but the person continues to fail to file the FBAR in subsequent years. When asked, the person does not provide a reasonable explanation for failing to file the FBAR. In addition, the person may have failed to report income associated with the foreign bank accounts. A determination that the violation was willful likely would be appropriate in this case.”

The choice is up to the taxpayer on whether to come forward and participate in the OVDI and argue for penalty mitigation, or wait and fight out a “willfulness” case.

 

Published In: Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sanford Millar, Law Offices of Sanford I. Millar | Attorney Advertising

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