United States: Is Julius Baer Group AG The Next Swiss Bank To Resolve Its Tax Problems With The U.S.?

If So, What Does It Mean To Those Who Had A JB Account?

Kevin E. Packman is a Partner in our Miami office.

Shortly before New Year's, on Wednesday, December 30, 2015, the media reported that Julius Baer Group AG ("JB") expected to pay about $547 million to settle the U.S. investigation into how the bank (and its bankers) assisted U.S. taxpayers in evading tax. This investigation began more than 4 years ago, and followed similar investigations into UBS Group AG and Credit Suisee Group AG.

On April 15, 2015, at its annual shareholder meeting, Daniel J. Sauter, chairman of Julius Baer's Board of Directors, stated that the bank was close to a resolution with the United States. He indicated that he was convinced that it "will be among the next banks to conclude this chapter." At that time JB set aside $350 million, which it thought would be sufficient to resolve the examination. Perhaps, the increase in the anticipated penalty by $197 million, will be sufficient to satisfy the Department of Justice. Reports indicate that the resolution may arrive in the first quarter of 2016.

United States taxpayers who currently have an unreported account at JB, or who had such an account, are well advised to quickly find religion and seek immediate legal counsel. Depending upon the facts of the particular taxpayer's case, it may be that participation in the 2014 Offshore Voluntary Disclosure Program ("OVDP") is appropriate. Because JB has yet to be added to the list of foreign financial institutions or facilitators (the "List"), the offshore penalty that will apply in the taxpayer's OVDP remains 27.5%. However, once JB is added to the List, the offshore penalty will jump to 50% in the OVDP.

Whether JB is added to the List is irrelevant to taxpayers disclosing their unreported JB account through the Streamlined Filing Compliance Procedures. Of course, taxpayers need to understand that if the IRS learns about their unreported account before they join the OVDP or one of the streamline programs, they will no longer qualify for any of the programs. Additionally, IRS Commissioner John Koskinen was quoted in a Bloomberg BNA Daily Tax Report article on December 17, 2015 as stating at the George Washington University Law conference on international tax "[a]t some point, we will have assumed that people have had enough notice that they should have become voluntarily compliant," "At that point—after some period of time and you're not compliant—it will be assumed that logically you are purposely not compliant." (See Laura Davison, "Streamlined Disclosure Program Won't Continue Indefinitely," Bloomberg BNA Daily Tax Report, 243 DTR G-3, December 18, 2015.)

Taxpayers should also be aware that any current accounts held at JB will be disclosed to the United States as a result of the Foreign Account Tax Compliance Act ("FATCA"). Additionally, any account previously held at JB which was not declared to the US, and transferred to another institution, especially in Switzerland is likely to be disclosed through the Swiss Bank Program (the "Program").

In an effort to assist the United States in resolving numerous cases against banks efficiently, the Department of Justice announced on August 29, 2013 that it had designed a program providing Swiss banks with an opportunity to resolve potential criminal liabilities arising from their dealings with United States customers.

Eric Holder, the Attorney General when the program was announced, stated at that time: "[t]his program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States."

What made the Program so unique was that it provided taxpayers with unreported accounts with a new threat. One of the features of the Program for those banks seeking to benefit from it required the Swiss banks to provide the Department of Justice with information on US accountholders. The banks had to disclose detailed financial information on accounts in which US taxpayers had any connection. Included in the information was the maximum account value, the name of any individual or entity affiliated with the account, and the connection such individual or entity had to the account. The banks also had to document the flow of funds into and out of the account. The information had to include how transfers were made, and from where and to where funds were transferred.

Banks were classified under one of four categories, 1-4. Those banks already under criminal investigation, of which JB was one, were specifically excluded from the program, and placed in Category 1. Those banks that were faced with potentially criminal exposure were placed into Category 2. Clearly, the program is a success. Seventy-five category 2 banks have resolved their cases with the Department of Justice in 2015. These banks have paid more than $1 billion in penalties to avoid prosecution, as well as the detailed information on the accounts.

The 75 banks will also be obligated to assist the Department of Justice in prosecuting taxpayers who hid their assets. Not only will the banks disclose information on their US account holders, but they will be obligated to provide ongoing assistance to the DOJ, which also includes providing testimony in a US prosecution based upon the information, including cooperating with treaty or other requests for additional information.

If you have failed to report one or more foreign bank accounts (assets or entities, or even income tax returns), and wish to discuss your options, please contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions