August 3, 2014

Taxpayers who are considering applying to the OVDP should be mindful of a certain upcoming deadline: August 3, 2014. Willful non-disclosers who do not apply to the OVDP by August 3, 2014 and who have an offshore bank account with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a U.S. government investigation will face an increased offshore penalty of 50% (from 27.5%).

The IRS has published a list of those foreign financial institutions or facilitators.
It includes the following:

1. UBS AG
2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
3. Wegelin & Co.
4. Liechtensteinische Landesbank AG
5. Zurcher Kantonalbank
6. Swisspartners
7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
9. HSBC India
10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield).

The IRS reserves the right to add new financial institutions to this list at any time, in which case entire groups of taxpayers will be ineligible to participate in the OVDP without any prior notice.

To avoid any confusion concerning the August 3, 2014 deadline, an important distinction must be made. This deadline only impacts the offshore penalty and not overall eligibility to OVDP. In other words, a taxpayer who has an undisclosed offshore account with one or more of the banks on this dreaded list is still eligible to apply to the OVDP after August 3, 2014 — so long as the IRS does not already have that particular taxpayer’s name — but will be subject to a 50% offshore penalty, as opposed to the existing 27.% penalty.
To the extent that the IRS already has a particular taxpayer’s name, then it will be too late for him to apply to OVDP, even if he doesn’t have an account with any of the banks on the list. Such a taxpayer could break his neck trying to apply to the OVDP before August 3, 2014, and even if his application is timely received, he will still be rejected.
Taxpayers who have already been identified by the IRS no longer enjoy immunity from prosecution and could be subject to willful FBAR penalties for multiple years. With stakes this high, taxpayers who are fearful that their failure to disclose offshore accounts will be deemed willful and who want assurances that they will not be prosecuted and/or subjected to draconian FBAR penalties should apply to the OVDP.
 http://www.deblislaw.com/t-minus-two-days-and-counting.html