In basketball, a full-court press involves the application of pressure from multiple directions, all over the floor. The goal is to steal the ball or force the other team to throw it away.
In the field of tax law, there is now a form of full-court press going on against U.S. taxpayers with undisclosed offshore accounts.
It isn’t only the IRS that is now going after this information. Under pressure themselves from U.S. authorities, Swiss banks have begun exerting their own pressure on their U.S. clients to disclose formerly secret foreign accounts.
In this two-part post, we will discuss this pressure and the options taxpayers have in responding to it.
We’ve already written fairly recently about efforts by U.S. tax authorities to obtain information about undisclosed accounts. As we discussed in our November 15 post, the IRS has issued so-called “John Doe” summonses to numerous foreign banks, seeking information about undisclosed accounts held by U.S. taxpayers around the world.
The ostensible purpose of such subpoenas is to gather information for possible prosecutions for offshore tax evasion. Fearing such prosecutions, or to help resolve prosecutions already underway, some leading banks have already given U.S. authorities the names of many of their U.S. customers.
The Swiss banking giant UBS, in particular, has already done this, in order to settle a criminal tax evasion case in which it also paid a huge fine.
Now, numerous Swiss banks are being enlisted in the IRS’s full-court press on U.S. taxpayers with undisclosed offshore accounts. The banks are urging their U.S. customers – both past and present – to disclose previously unreported accounts to the IRS.
The urging is not always merely a polite request. Swiss banks may even go so far as to freeze the assets of current clients who have not complied with disclosure requirements.
Clients’ compliance with disclosure requirements, in the eyes of the banks, could take the form of seeking to participate in the IRS’s limited-amnesty program. That program, which has taken various forms in recent years, is designed to encourage voluntary disclosure.
Source: The Wall Street Journal, “Swiss Banks Pressure U.S. Clients,” Laura Saunders, Dec. 27, 2013