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Deutsche Bank to cooperate in Swiss bank disclosures

We have previously discussed how banks have sought to avoid prosecution for helping Americans evade taxes through a U.S. Department of Justice self-reporting program.

The most recent bank to enter the voluntary program is Deutsche Bank. By taking part in the program, the bank has agreed to disclose any U.S. accounts that previously were undeclared. The bank may still face penalties amounting to as much as half the value of the hidden accounts. However, participation in the program could allow the bank to negotiate a lower penalty.

The Justice Department rolled out the program last year. Since then dozens of Swiss Banks have agreed to participate in the Internal Revenue Service’s continuing effort to ferret out undisclosed offshore accounts.

The Swiss units of Goldman Sachs Group and Morgan Stanley have already entered the program and will face possible penalties. Deutsche Bank has smaller Swiss operations with roughly 13,000 clients. The bank acquired the accounts when it bought up two smaller firms in 2003 and 2009.

The process for banks in the self-reporting program has been described as a trying experience, according to the Wall Street Journal. One part of the challenge is that banks need to have current and former clients waive privacy rights under Swiss law, so they can give U.S. authorities information on clients with disclosed accounts. Voluntarily disclosed accounts reduce the bank penalty.

Savings for banks could be substantial. However, some clients have not wanted to provide the required paperwork. For individual taxpayers penalties could be steep especially when accounts haven’t been reported for many years.

As the IRS continues to force banks around the world to provide more information on account holders, it is important to ensure that all your foreign assets are properly disclosed.

Source: The Wall Street Journal, "Deutsche Bank to Aid U.S. Justice Department in Swiss Tax Evasion Probe," John Letzing and Eyk Henning, Oct. 9, 2014

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