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  1. Phil,

    Thanks for the info regarding the IRS following the mitigation guidelines. Obviously, there’s no guarantee, but it’s useful information indeed.

    As an aside, I’ve worked with Douglas Hornung as well, and my impression of him is positive.

  2. Mr hodgen,

    You say that tax cases are either money problems, or money + prison problems.
    Could it be a money + deportation problem as well for immigrants?
    Not looking for legal advice here, but would you mind chiming in on this issue from the perpective of immigrants to the US?
    You can find many articles online saying that you can be deported for not having filed FBAR, and that OVDI is the only solution for immigrants. The answer is probably as always “it’s on a case by case basis”. But have you worked with immigration lawyers on the issue. Guidelines for immigrants would be great. Or are they in the same situation as the Swiss customers whose accounts are frozen?
    My immigration lawyer told me the same thing as the Swiss banks are telling some of their customers: “Enter the recommended IRS program or I won’t help you”. I dumped her. Didn’t make sense for me to spend a fortune on OVDI in my case. But the fear of deportation if I am audited has been keeping me awake at night.

  3. Swiss law does cover the blocking/freezing of accounts. There are protections for the client. I am not familiar with specifics but Swiss legal counsel should know.

  4. Thanks for the comments. Yes I have met Mr. Hornung and his wife.

    I’m not sure what to say about freezing funds. Incredulous, I am. Said Yoda. 🙂

  5. Phil, a couple of comments

    First, I question the legality of what the Swiss banks are doing under Swiss law. In Canada, Ontario to be exact there was a case called Van DeMark back in the 1980s which basically says as a matter of common law a Canadian bank cannot freeze someone’s account on behalf of a foreign country. Given the common law origins of the case it is largely believed to be relevant to all common law jurisdictions including the US. Van DeMark is a smaller portion of a trilogy of cases under Canadian law where the IRS has been largely unsuccessful in enforcing tax claims in Canada(The IRS was the “foreign” country in the Van DeMark case).

    Now of course Switzerland is a civil law country not a common law country so everything I said previously could be totally inaccurate however, civil law countries tend to mirror common law countries on issues relating the revenue rule. One Swiss specific suggestion for someone who has a frozen account(and this is specific to expats/Swiss residents) is to contact a Swiss lawyer named Douglas Hornung of Geneva who specializes in US tax and banking issues but from a Swiss law perspective. If the last name sounds familiar that is because it is. I actually think you Phil may have met him or at least met his wife once.

    The other thing I have heard second hand relating to some of these recent stories is some Swiss banks want people with CLN’s issued after the 2004 law to provide proof the entered OVDI also.

  6. Phil,

    Very interesting to hear you’ve done so many opt outs. If you don’t mind my asking, have you found that the IRS follows the mitigation guidelines from the Manual?

    Happy Holidays to you and yours!

  7. @Someone,

    We are ridiculously busy until the end of the year. We did a TON of opt-outs and the message to you (and others in your position) is that you can look at the law and the Internal Revenue Manual and pretty much figure out what your result should look like. The IRS follows its own rules. By all means call the office. Tax professionals should not use fear as a sales technique. The OVDI is a useful tool but it is not the correct tool for everyone.

  8. I am someone who was scared into OVDI. Would like an opinion as to whether I should opt out from someone other than my lawyer whose experience is almost nil on optouts. Will contact you for a referral. Also wish I could buy an hour or two of your time on whether or not I should opt out, but I respect your decision to not want to have anything more to do with OVDI.

  9. Phil, the Swiss and the economy are doing great – it is one of the richest per capita country in the world – the standard of living is very high. Since Basel II and III the capital base has slowly increased but as the SNB has put it today there is more room to the upside,
    nevertheless the swiss incl. the expats are a very cautious bunch of people hence the cash piles have increased in 2013 but it stays in the country which is imo. the right move with regards to Bernake`s QE and POMO.

    Just saw some more swiss bashing at

  10. Interesting trend. Expats are probably a small percentage of resident Swiss bank deposits, yet I suspect the banks do not like the drain from the deposit base. This is classically safe money for banks. This is their bread and butter customer.

    Nonresident deposits are fleeing Switzerland, too, and not just American money. Switzerland was once the banking equivalent of hiding money in your mattress for safety. I know that many people fleeing the Iranian revolution in the late 1970s stuck money in Switzerland — just in case. They knew what could happen because they experienced it. One wonders where “ultimate safety” money goes now. . . .

  11. btw. a little observation : since 1/2013 it has been a strong trend in CH that many expats have taken out up to 9,900 CHF/month cash and the money has not returned.

  12. It’s going to be interesting if the Anti-FATCA campaign get’s the 50,000 signatures for a Swiss referendum by next month.

    What is the US going to do if the Swiss people say NO?

  13. So, if the local account of a little fish gets frozen and they are thus forced into OVDP to get their taxed savings needed to pay the rent, can they do all of the OVDP annoyances on their own without paying for a lawyer with money that they don’t have?

  14. Phil,

    I have clients whose Swiss (and Israeli, and . . .) accounts are frozen by the banks, pending the clients signing W-9 forms and/or certifying that they are in IRS compliance. Obviously, clients are scrambling and calling me to un-freeze their accounts. These clients, of course, have two issues: access to their money, and the larger issue of IRS compliance. And, by the way, my experience is that the foreign banks freeze 100% of the account, not half.

    I know exactly what you mean regarding the disproportionality of the Offshore Voluntary Disclosure Program in cases with no tax fraud. In such cases, there may be a way for clients with fact patterns containing no tax fraud to come into compliance without a formal voluntary disclosure and its attendant penalty. In such cases, it may be possible to come into compliance and satisfy the foreign bank and unfreeze the account. But this avenue is very fact specific, and not available for all cases. Not everyone with foreign assets should avoid the OVDP, but not everyone with foreign assets should enter the OVDP.

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.