In an effort to resolve a dispute with the United States government, Swiss bank Credit Suisse will lift the veil of secrecy shrouding its bank accounts. This action could result in potentially severe consequences for many Americans.
Switzerland's second largest bank is being investigated by the United States government for possibly helping U.S. citizens evade taxes through "secret" accounts. The bank will turn over previously confidential account information such as client names and account information to the Swiss Federal Tax Administration, who, at its discretion, will provide this information to the Internal Revenue Service (IRS). Problems for American taxpayers may arise if these international accounts have not been reported to the IRS.
In recent years, the IRS has offered amnesty programs to taxpayers who have failed to disclose a foreign (or offshore) bank account on the foreign bank account reporting (FBAR). The amnesty programs allowed taxpayers to face lessened penalties if they voluntarily disclosed their unreported accounts. Taxpayers are required to file an FBAR if they have $10,000 or more in a foreign account.
Penalties for Failure to Disclose Accounts
American's with yet-to-be disclosed Credit Suisse accounts, or accounts with other foreign financial institutions, could risk facing severe civil and criminal penalties for failing to properly report these accounts.
Even if taxpayers have yet to report foreign accounts, they may still be able to do so through the IRS's voluntary disclosure procedures. Even though the IRS' amnesty programs have ended, voluntarily disclosing account information may help taxpayers mitigate potential penalties and avoid criminal prosecution. Taxpayers that hold unreported foreign financial accounts, especially Credit Suisse accounts, should speak with an experienced tax attorney as soon as possible to discuss all legal options.
