LLB Verwaltung (Switzerland) AG, formerly known as Liechtensteinishe Landesbank AG (LLB-Switzerland), a Swiss-based private bank, settled with the U.S. Department of Justice and agreed to pay a penalty of $10,689,554.64. In turn, the Department of Justice agreed not to prosecute the bank for tax-related crimes.
The Justice Department’s agreement with Verwaltung AG is part of the Government’s efforts to identify U.S. taxpayers who are hiding income from the IRS. The DOJ contended that the Swiss bank conspired with U.S. citizens to set up secret accounts, nominee companies, and take other actions to hide income. Verwaltung AG will give the DOJ and IRS records of all the bank’s American customers.
By threatening the bank with criminal prosecutions, the DOJ will learn the identity of all current and past U.S. citizens who were customers of Verwaltung AG and its predecessor, Liechtensteinishe Landesbank AG. With this information, the IRS will begin examinations of all account holders, which will result in not only civil audits, but also criminal prosecutions.
The IRS begins examinations in one of two ways. First, the IRS will send a letter advising that a civil audit will be opened concerning the Verwaltung AG offshore accounts. A second letter will request copies of the yearly U.S. government forms disclosing offshore accounts that each taxpayer should have filed. Both letters will result in civil fraud penalties of up to 75% of the unpaid taxes, in addition to the unpaid tax and interest. There will also be another penalty of 50% of the amount in the offshore account for each year the offshore account disclosure forms were not filed.
The second way that an IRS investigation can begin is when two IRS Criminal Investigators (known as Special Agents) come to a person’s home or office to conduct an interview. Special Agents of the Criminal Investigation Division of the Internal Revenue Service enforce criminal tax laws. If a Special agent attempts to talk with a taxpayer about offshore accounts and undisclosed income, that means a criminal investigation has already begun.
If the IRS contacts a person with an account at Verwaltung AG, or its predecessor, through civil auditors or criminal agents, the risk of being charged with criminal tax fraud exists. A civil fraud penalty involves only money, while a criminal fraud prosecution can lead to years in prison.
For a person with an account at Verwaltung AG, the danger of speaking with an IRS representative, whether civil or criminal, without an experienced criminal defense attorney, is great and will increase the likelihood of criminal charges.
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The Law Offices of Horwitz & Citro, P.A. has experience in dealing with civil IRS audits and criminal tax investigations and prosecutions. Our offshore banking defense lawyers have represented people who have been under investigation and prosecution for tax crimes. Our goal is to protect our clients’ liberty and property. The best result that can be obtained is that no criminal prosecution is brought, and civil penalties are minimized.
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