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US Extends Deadline For Swiss Bank Disclosures

by Mike Godfrey,, Washington

10 June 2014

On June 5, the United States Department of Justice (DOJ) extended some information reporting deadlines for Swiss credit institutions that have sought to participate in its tax regularization program to secure a non-prosecution agreement.

Signed by Switzerland and the US on August 29, 2013, the Program provides a framework permitting eligible Swiss banks seeking non-prosecution agreements to resolve past "cross border criminal tax violations." By cooperating with US authorities and disclosing information on US account holders, Swiss banks would be able to avoid prosecution, but would still be subject to a significant fine of between 30 and 50 percent of the total sum of their US clients' undeclared assets.

Swiss credit institutions had until December 31, 2013, to request participation in the DOJ's Program. With banks that were already being investigated and facing prosecution being already excluded from the regularization program, the DOJ's Tax Division pledged that it would not authorize formal criminal investigations of any additional Swiss banks prior to the December 31 deadline.

In January 2014, Assistant Attorney General Kathryn Keneally announced that the Tax Division had received 106 letters of intent, and it has been confirmed that the Division has been engaged in extensive discussions with those institutions. Based on these discussions, the Tax Division has now disclosed additional comments and certain deadline extensions regarding the Program.

In particular, while the Tax Division may authorize at any time a formal criminal investigation of any Swiss bank that did not submit a timely letter of intent to participate in the Program, the Division has recognized the difficulty that some Swiss banks have encountered in obtaining proof that an account was not an undeclared account or was timely disclosed by the Swiss bank to the Internal Revenue Service.

Therefore, the time in which a Swiss bank may demonstrate such proof has been extended from June 30, to July 31, 2014. Swiss banks participating in the Program are also now expected to provide verification of all the information required to execute non-prosecution agreements by that later date.

In addition, the Tax Division has confirmed that it intends to release publicly the fact that it has entered into a non-prosecution agreement with a bank. However, it also confirmed that the personal data provided by a Swiss bank under the Program will not be made public, and may only be used and disclosed for purposes of law enforcement.

TAGS: individuals | compliance | tax | tax compliance | law | enforcement | agreements | Switzerland | United States | Tax

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