The list is long and getting longer. The IRS recently added five more banks to the list of non-U.S. banks where, if you’re an American, your account triggers an automatic 50 percent FBAR penalty based on your account balance.
Following are the five banks newly added to the list, which you can expect to grow as more Swiss banks continue their cooperation with the U.S.:
- Finter Bank Zurich AG
- MediBank AG
- Scobag Privatbank AG
- LBBW (Schweiz) AG
- Societe Generale Private Banking (Lugano-Svizerra) SA
If you have accounts in these or any other banks on the IRS’s list, then don’t hesitate to come into compliance. Waiting could result in prosecution and much higher civil penalties.
The penalty increase from 27.5 percent to 50 percent is part of changes to the IRS’s Offshore Voluntary Disclosure Program (OVDP). The 27.5 percent penalty still applies to accounts with non-U.S. banks not on the list.
Some U.S. taxpayers with offshore accounts may be eligible to use the streamlined compliance procedures. These are the Streamlined Domestic Offshore Procedures and the Streamlined Foreign Offshore Procedures. To qualify for this program, taxpayers must, among other requirements, certify that failure to report income and pay taxes was due to non-willful conduct.
In any case, not acting now to come into compliance with FBAR and FATCA reporting could have catastrophic consequences. For example, because civil penalties can be applied for each violation rather than a single 50 percent penalty, one taxpayer was ordered to pay civil penalties that came to 150 percent of the total of his offshore account balance. In that case, a single penalty of 50 percent sounds much better than the alternative.
With the stakes so high, it is crucial that offshore account holders seek help from a tax law attorney and take advantage of the attorney-client privilege.
