U.S. Taxpayers with undisclosed Swiss accounts that have been sent letters by Swiss Banks should know that the Swiss Banks will potentially provide information about U.S. Taxpayers with undisclosed Swiss bank accounts to the IRS. This disclosure of U.S. taxpayer account information is happening because some of the banks in Switzerland are joining the IRS Voluntary Disclosure Program for banks.  The Swiss banks that are entering into the IRS Voluntary Disclosure Program are trying to avoid criminal prosecution and/or investigation. 

The Internal Revenue Service (IRS) continues to accept 2012 Voluntary Disclosure applicants as U.S. taxpayers seek protection from severe civil penalties and the possibility of criminal prosecution, which has stemmed from the risk of maintaining an undisclosed offshore account.

Liechtenstein’s second largest bank, Liechtensteinische Landesbank AG (LLB), is beginning the process of turning over U.S. account holder data to U.S. authorities. Any U.S. client who maintains an undisclosed offshore bank account through LLB will have their information turned over to U.S. authorities. LLB is currently notifying its U.S. clients that the bank intends to comply with the IRS information request.

The Internal Revenue Service’s Senior Counsel in charge of the Offshore Program recently announced that more guidance on duel citizenship and how it will affect undisclosed offshore account holders will be released as supplemental information to the current 2012 IRS Voluntary Disclosure Program. This information will provide US taxpayers, who may hold a duel citizenship, with undisclosed offshore accounts a better understanding of their tax liability.

Switzerland recently authorized its banks to hand over the names of professional employees, external wealth mangers, lawyers and trustees who have helped U.S. taxpayers commit tax evasion. Moreover, the banks are authorized to release email traffic in connection with U.S. taxpayers who are suspected of maintaining an undisclosed offshore account. The release of such information will likely contribute to establishing cases against those U.S. taxpayers currently under investigation. While U.S. client data is not being released at this moment, the employee information will help the IRS in its investigations into both foreign banks and U.S. taxpayers with undisclosed offshore accounts.