You know you are a U.S. citizen, but your bank wants you to know that they know too.
Jeffrey S. Freeman, J.D., LL.M
It’s not junk mail, your Swiss bank did just send you a letter informing you that you are a U.S. citizen. Why did they send you this letter? It’s all because of an agreement they made with the U.S. Department of Justice (DOJ),
Verify Your Tax Compliance
Your Swiss bank made an agreement with the DOJ that requires them to verify that all their U.S. account holders paid taxes on their offshore earnings. The letter goes into an impressive level of detail about why they need to know you are in compliance, but it boils down to they need to protect their own skin and prove that they have provided you notice. Your account information has been shared with the DOJ and you need to make sure that you are current with taxes.
Documents they want to see
To verify your tax compliance you need to provide proof that you filed your tax returns, proof that you included the income from your foreign accounts on your tax returns, and if your account balance was higher than $10,000 you need to provide proof that you filed your FBAR forms.
What if you can’t provide this proof? The bank is not concerned with the why you may have specifically not included this income on a legal document, but they need to have records that you are working to make your tax records accurate. If your tax records do not show your foreign account then you must provide documentation show if you have entered the Offshore Voluntary Disclosure Program or Streamlined Filing Compliance programs to clear up your errors. A certified letter from a U.S. attorney stating that you are entering into the program is also acceptable so as you do not rush into the incorrect program without fully discussing with legal counsel.
You must respond
The bank has financial skin in the game and has agreed to pay 20% of the highest account balance that you have had at the bank for any account that is not proven to be tax compliant. If you do not prove that you were tax compliant or are working to become compliant you could be called upon to reimburse the bank for the 20% that they had to pay the U.S. Government. This causes all sorts of trouble and challenges. Start seeking legal counsel today and especially as soon as you receive a letter from your bank to clear up your foreign account tax responsibility.
About Freeman Tax Law
Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.
Freeman Tax Law