This post appeared on the RenounceUScitizenship blog.
DOJ announces new #OVDP program for Swiss banks that allowed US clients http://t.co/JM99xytMt7 – Banks pay fine based on % of deposits
— U.S. Citizen Abroad (@USCitizenAbroad) August 30, 2013
The title of article by Lynnley Browning is:
“Swiss on agree on penalties for banks that aided tax cheats”
A review of the article suggests that the U.S. government is attempting to impose on Swiss Banks a program that is like the “OVDI-OVDP” program.
The article begins with:
Switzerland and the United States reached a watershed deal on Thursday to punish Swiss banks that helped wealthy Americans stash money in hidden offshore accounts, closing the door on an era of bank secrecy and tax evasion.
The formal agreement, which was announced on Thursday by the Justice Department in Washington and will be presented by Swiss authorities on Friday, outlined formulas for Swiss banks to pay up to billions of dollars in fines and disclose information about American account holders, a joint statement said.
Features include:
– an agreement to NOT prosecute if the banks do a voluntary disclosure of balances of accounts held by U.S. persons in Switzerland;
The agreement said that Swiss banks that follow the program will be eligible to enter nonprosecution agreements that do not involve guilty pleas or criminal penalties.
– in return for non-prosecution the banks agree to pay a penalty based on the top dollar value of undisclosed accounts;
Banks that held accounts as of Aug. 1, 2008, will pay a fine equal to 20 percent of the top dollar value of all nondisclosed accounts. The fine increases to 30 percent for secret accounts opened after that date but before March 2009, and to 50 percent for accounts opened after that.
(Note that those who came into compliance earlier will pay less.)
– if a bank is already under investigation they are not eligible for the program;
Significantly, the deal does not cover 14 Swiss banks and Swiss branches of international banks that are under criminal investigation by the United States authorities, includingCredit Suisse, Julius Baer and several regional banks. Instead, it effectively covers the rest of the Swiss banking industry, home to a tradition of bank confidentiality and laws that have not considered tax evasion a crime. By some estimates, Switzerland is home to more than $2 trillion in overseas deposits
– as a condition of entering OVDP for banks, the participating bank agrees to provide information on other banks, U.S. person account holders and their advisors;
The deal calls for stiff measures that lift the veil of Swiss secrecy. Banks will be required to provide the details on accounts in which American taxpayers have an interest through treaty channels, inform on other banks that transferred money into secret accounts or that accepted money when secret accounts were closed, disclose all cross-border activities, and close the accounts of Americans who are evading taxes.
– this new OVDP program for the banks is to put further pressure on U.S. citizens to abroad to enter their own OVDP;
The agreement will also turn up the heat on American clients who have not already entered voluntary disclosure programs with the Internal Revenue Service.
(How many innocent U.S. citizens abroad that just happen to have a bank account in Switzerland will be terrorized into entering OVDP?)
– and finally in addition to recognizing Swiss Banks and U.S. citizens (including those living abroad) as their enemies, the Obama administration vilifies Senator Rand Paul (yes, he must be responsible for tax evasion);
A stumbling block may still exist. The deal calls for both sides to use information exchange channels outlined in existing treaties. But the United States has not yet ratified a 2009 treaty protocol that would ease that disclosure, with Senator Rand Paul, Republican of Kentucky, blocking approval, arguing that it would give the I.R.S. too much power and violate Americans’ right to privacy.
The possible next step …
The U.S. is clearly on a mission to confiscate assets throughout the world.
In the beginning, there was OVDP for individuals.
Now we have OVDP for banks.
Coming soon, OVDP for financial advisors.
Soon, we will all become Whistleblowers.
The solution to this is for the U.S. to simply absorb all the other sovereign nations of the world. Once we become one country, there will be no more “offshore accounts”. But, how would fines be imposed then?
Conclusion and message to U.S. citizens abroad …
You better enter OVDP before your bank does!
Pretty good deal for the US. They’re doubling down on penalties. They get the 20% from the banks, AND the 27.5% for the persons affected who enter OVDP (or 50% of the max balance for those who don’t).
Definitely a confiscation mission. Purely disgusting.
When is someone going to stand up against this and publicly denounce what the US is doing in that arena?
I cannot read in all of this what the Swiss get from the american government. Did not congressman Posey say that there will be no reciprocity?
Perhaps living on cash only and cashing in all bank accounts, perhaps paying a high Cdn income tax may be best for some.
I have no american ever to come to me.
I forgot to put in income. I never will get american income.
@Northern Star, I have removed all but a few hundred dollars from my US-based account. Thoigh having investments in it would have much lower admin charges and commission, I still concluded that I’m safer to no longer have assets within the US; to have continued doing so would have made me a lower hanging fruit, plus could have continued having to file a 1040-nr on my US-sourced income. No thanks.
I’m repeating what I wrote on another thread:
I’m afraid that their desperation is leading to them shaking down anyone and everything they can. This will come in the form of fines instead of incurring the huge public expense of running wrongdoers through the courts. It’s win-win for the government and those who flout the law, but is justice being served? No, but many are willing to overlook that in getting money into the US Treasury quickly.
The Swiss government knew it had to agree to something that the Americans would accept. They’ve been struggling to deal with this since the US took UBS to court and won. It also helps the Federal government in that it doesn’t have to go before the Swiss Parliament for approval, unlike the last attempt which was voted out.
http://www.swissinfo.ch/eng/politics/Details_of_Swiss-US_banking_deal_outlined.html?cid=36782498
http://www.thelocal.ch/20130830/swiss-banks-set-to-pay-hefty-fines-under-us-tax-deal
Whether this will increase the number of people renouncing or not depends on how many are left who can still get out and haven’t yet done so.
Coming to Canada soon?
@ brockers. repeat. of. all. messages. to . USPs. abroad. get. out. now.
to those U.S.Ps. abroad who cant yet get out…..strength and honour. all brockers want to, will do help where and when they can.
message: dont go to America dont publicise America as desirable destination
get the MESSAGE OUT . Amazing that the country that gave the world Hollywood, Madmen and media studies cant realise that the whole CBT, OVDI , OVDP, FBAR, FATCA [ aka same pension fund being reported 3x on FBAR, 3520 and 3520A, AND 8938 ] = LARGE GUN pointed at OWN FOOT. we are American in heart/mind/spirit/history…virtual Paul Reveres!!!
Even Paul Reveres’ midnight ride as told in US history classes is 75% fable.
50 percent maximum balance for those who won’t go into the program for criminals? What?!
I think those who didn’t renounce yet will be lining up. Wonder how hard it’s going to get to get an appt. in Switzerland now? I get it about UBS, I DO but, they HAVE to know that average everyday people with local checking accounts are NOT to do with the big fish they keep equating us with.
@Joe, lol…yes, there was another individual long forgotten who rode much further to “warn” about the British coming. These days I wish he’d just kept his big mouth shut. lol!
Can someone be able to explain to me what are the Canadian banks will be doing. Will they go into our accounts and our money and give it to IRS? Or is this for just money coming from usa transactions, which I have none. Will the Canadian banks ask us to take all our money out of their banks? I would be paying a high Canadian income tax but so be it. I rather it go to Canada than the mericans.
And put my cash money in a fully paid home. What can the mericans do then?
Congress could try to pass an amendment that retroactively reinstate US-tax status to recent renunciants in to deter the surge in expatriations.
Just for money coming from US. AS I mentioned before, you are immune to all this B.S. because you ceased to be an American in the 1990s.
What comes down from my ancestors is that many rode and Reveres’ role was not what it was made out to be. But the USA always like to have heros to worship. Also a Canadian doctor married Paul Reveres’ great granddaughter. So there is not a lot of truth in the stories that are told. This includes the reasons for the revolution.
@kalc, thanks, again.
@joe zinga, you mean all that us history I learned from walt disney is not completely true? LOL
Sorry, I meant great granddaughter of Paul Revere. Her name was Grace Revere and she married a noted Canadian physician who became the first Profeesor and Chief of Medicine at Johns Hopkins, Sir William Osler. Osler is considered the greatest physician of the 19 and 20th centuries. He wrote the first organized textbook of medicine which was the medical bible for decades. He is credited with revolutionizing medical education through the establishment of the first medical residency training programs and an enhanced focus on bedside teaching. After Hopkins he became the First Baronette and Reguis Chair of Medicine at Oxford.
Mark Matthews of Caplin & Drysdale comments:
Mark E. Matthews of Caplin & Drysdale, former chief of the IRS Criminal Investigation division, noted the significance of the program. “Across the board, it looks like a step-up in enforcement and aggressiveness in what the U.S. and the IRS have been doing for the last four or five years,” he said.
But Matthews said the program offered some reprieve for many Swiss banks. “This is going to be an attractive opportunity for any of the financial institutions other than the 14 banks [already under investigation] in Switzerland who are worried about their status under U.S. law. It’s going to be expensive, particularly for those banks that persisted with . . . helping customers move from one bank to another,” Matthews said, adding, “But, ironically, it gives them a bit of an out.” Matthews explained that if the banks get their customers to make voluntary disclosures to the U.S. before the program goes into effect, “it looks as though they will get a discount on the penalty.”
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http://www.capdale.com/mark-matthews-comments-on-us-swiss-program-to-combat-tax-evasion
Scott Michel Speaks with Bloomberg on DOJ’s Tax Deal with Swiss Banks to Reveal U.S. Account Information
Scott Michel, a member of Caplin & Drysdale, Chartered, in Washington, called the program an “extraordinary development”—one that would be attractive to Swiss financial institutions and result in large amounts of information being turned over to U.S. tax authorities.
‘Leavers’ Targeted
Specifically, he said, the program is focused on tracking down what he called “leavers,” or U.S. people who moved their accounts from one bank to the next in the effort to evade taxes.
“Banks will have to identify other financial institutions from which accounts were transferred or to which they went upon closure,” he said, adding that this could create “a circular firing squad.” If one bank has to identify another, “it’s in the second bank’s interest to participate. It’s clear that banks here will be making all kinds of disclosures as to the names of independent third parties affiliated with the accounts as well as their own employees,” Michel told BNA Aug. 29.
Multiple Penalties
Speaking to BNA Aug. 29 about the new U.S.-Swiss program, Michel stressed that the government’s intent is to find taxpayers that have moved from one bank to another. He said it is possible that multiple banks will be paying penalties on the same account or funds, if those accounts were transferred from one participating bank to another.
He said the program is interesting because it incorporates several components that originated under the Foreign Account Tax Compliance Act. That 2010 law requires foreign financial institutions to report their U.S.-owned accounts to the U.S. Internal Revenue Service or else pay a 30 percent withholding tax on certain U.S.-source payments.
Since FATCA was enacted, Switzerland has signed a so-called intergovernmental agreement (IGA), which allows banks to share the account information with the Swiss government, which then would transmit it to U.S. tax authorities.
The program announced Aug. 29 “turns that IGA into a broader, more retrospective set of understandings between the two countries to resolve the past issues, not just set in place a disclosure regime for going forward,” Michel told BNA.
Swift Action Urged
However, “if a bank decides to participate in this program, it is taking on responsibilities that go beyond the terms of the US-Swiss IGA under FATCA,” Michel said.
He said banks should not wait to participate. “Since the program deadline is Dec. 31, it strikes me as being foolhardy for a given bank to wait to see if it would be identified by another participating institution,” Michel said.
He noted that banks can get penalties reduced for clients who enter the IRS’s offshore voluntary disclosure initiative (OVDI). This allows taxpayers to reveal their offshore assets in return for a set penalty structure and the chance to avoid criminal prosecution.
“We would expect that they will at least try very hard to get their existing or former U.S. account holders to make that decision,” he said.
http://www.capdale.com/scott-michel-speaks-with-bloomberg-on-dojs-tax-deal-with-swiss-banks-to-reveal-us-account-information
It beyond my comprehension that US persons who live abroad are continuing to be rounded up and subjected to the same scrutiny and punishment that tax evaders living in the US will be. Just when I think it can’t get any worse, it does. It’s complete RECKLESS MADNESS.
“He noted that banks can get penalties reduced for clients who enter the IRS’s off shore voluntary disclosure initiative (OVDI).”
What again? Banks can get penalties reduced? Just how big of a role are banks going to play here in private citizens affairs with this “initiative” So, the banks don’t have enough power over us already? How would something like this work in Canada? There’s no way on earth I’d allow our bank to communicate anymore of our information than they already do. How would this work? Is a bank supposed to discuss your issue with the IRS and then bargain a lower penalty for you? What would they charge for something like that? Surely, that isn’t their role?!
@AtticusinCanada
It would appear that it would be in the bank’s best interest to herd as many of their clients they can into OVDP. I suspect that they won’t be concerned about discriminating between minnows and whales. How could and why would they?
@Bubblebustin, good luck to us all trying to discuss rates or better terms with our bankers after this. They can hold FATCA over our heads. It looks to me as if when you sign away your rights in order to be able to bank that even then you’ll be under scrutiny for the rest of your life, offered less favourable terms perhaps. The consequences of FATCA are so far reaching and never ending. Really, I do not see any way for someone to live outside the U.S. as a U.S. person anymore and have a normal life. How can they think we wouldn’t renounce? And if they know many of us will have to *and they do* then the very LEAST they could do is make an easy path out. One appointment, CLN handed over…no further requirement except a last form saying you are not an American any longer and stop with the threats to keep us out.
Fine, they want to continue on with this then let us go in peace with no further paperwork for minnows and no threats. I’d almost say that’s what we ought to be lobbying for. After all they aren’t going to stop with this and Canada looks like they are dead silent. China signed on…the deal the Swiss have? Whose the “criminal” now, U.S.A.??
With this dealing approach with the banks, does it now seem the US is trying to retroactively do FATCA for 5 years back in time? And will Canadian banks be seen as having violated the US Title 26 code by virtue of simply accepting (in many if not all cases unknowingly) US person deposits into a Canadian bank account?
@HalifaxLoyalist” I don’t think that’s possible. After all it’s not like anyone was asked or mentioned they were American. It didn’t occur to anybody that would make a dimes worth of difference before now. Most of us just didn’t think about what nationality we were when we opened our bank accounts and neither did the banks. Sure, we showed I.D. but, most people used local I.D., gave CANADIAN SIN numbers or other identifiers from the countries they live in. Banks wouldn’t have known and wouldn’t have cared before this and neither did we.
The Canadian supreme court should rule that implementation on Canadian resident & citizen are illegal. This include the stupid closer connection rule on snowbird. This was a stupid Clinton rule.
The US welfare state will continue. You can easily win elections by giving free stuff to people.
Canadian snowbird should be advised about the problem.