The Department of Justice and the IRS are now mining the wealth of data obtained through settlements (Non-Prosecution Agreements) with almost 100 Swiss banks. The search through the data is methodical.
First the government seems to be looking for “leavers”. Leavers are U.S. taxpayers who maintained an account at a foreign fianancial institution and who transferred funds from one foreign finanicial institution to another to avoid disclosure. The government considers these taxpayers as “willful” non-filers and will seek maximum FBAR and pernalties under the Bank Secrecy Act and maximum information return penalties under the Internal Revenue Code.
The governments position is that U.S. taxpayer’s have had multiple opportunities to come forward under the various voluntary disclousre programs, including 2009, 2011, 2012 and 2014. Many taxpyer’s have still not listened to the message. In Hollywood with respect to films, there is an old addage, “if you want to send a message, send a telegram”. Well, the IRS and Department of Justice have modified the appraoch. They are serviing Grand Jury Subpoenas for “Required Records”.
Since at lest 1948 the Supreme Court has held that the Fifth Amendment protection against self-incrimination does not apply to the production of documents which must otherwsie be maintained by the taxpayer. The government is now using the Grand Jury process to obtain records or document the failure to maintain records of taxpayer’s whose financial information is obtained thorugh Non-prosecution agreements. The taxpayer is then stuck between producing records that confirm the ownership and control of offshore accounts and face prosecution for “willful failure to file” FBAR’s and other information returns or face the smae prosecution for not producing the records. What should taxpayer’s do?
There may still be time to come forward and submit a voluntary disclosure, particularly if a U.S. taxpayer has funds in a financial instution that is not already stuck a deal with the government. On the other hand, if served with a Grand Jury Subpoena for records, then a U.S. taxpayer must hire counsel immediately and counsel should do a coplete review of the taxpayers financial records and tax returns to determine the best path foreard.
The message is come forward now, no they will likely find you.