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Two Months Until First Deadline - Tax Division Encourages Banks to Participate in the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks and Publishes Comments on the Program

The following post appears courtesy of the Tax Division On Aug. 29, Deputy Attorney General James M. Cole and Ambassador Manuel Sager of Switzerland signed a joint statement announcing the program for non-prosecution agreements or non-target letters for Swiss banks (the program). For eligible Swiss banks that want to seek non-prosecution agreements to resolve past cross-border criminal tax violations, the Dec. 31, 2013, deadline to enter the program is now less than two months away.   At its core, the program provides a framework that permits a Swiss bank to provide the cooperation to resolve potential criminal matters with the Department of Justice. The Swiss Federal Department of Finance has released a model order and guidance note that will allow Swiss banks to cooperate with the Department of Justice and fulfill the requirements of the program.   The Tax Division has committed that it will not authorize formal criminal investigations of any additional Swiss banks prior to the Dec. 31, 2013, deadline. Under the program, each cooperating bank will be required to provide information about interbank transactions involving undeclared U.S. accounts. A bank that wants to come forward to cooperate can do so before the deadline with the assurance that information received from others has not made its cooperation untimely. Any bank that does not come forward before the deadline faces the very real risk that information provided by others may cause the bank to be targeted and prosecuted.   The Tax Division has received a number of inquiries about the program, and today it has published comments to its website to address a number of common topics. The department continues to encourage Swiss banks to consider the program.   In addition to requiring cooperating banks to provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed, banks that receive non-prosecution agreements will also be required to provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest, cooperate in treaty requests for account information, agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations, and to pay substantial penalties commensurate with their culpability.   Through these disclosures, the program should significantly assist in the department’s ongoing investigations and prosecutions of U.S. taxpayers who have evaded U.S. tax and reporting obligations, and who have failed to avail themselves of the Internal Revenue Service’s voluntary disclosure programs. The program does not apply to individuals, who must resolve any criminal liability separately. Banks that are already under criminal investigation have been notified that they are expressly excluded. The division is committed to investigating offshore tax evasion around the globe.
Updated April 7, 2017