Trouble for Offshore Bank Account Owners at Liechtensteinische Landesbank AG (LLB)
According to a spokesman for Liechtensteinische Landesbank AG (LLB), changes in Liechtenstein law allow the IRS to make group requests without providing the names of the specific individuals that the IRS is seeking. The spokesman also stated that in the Liechtenstein group request, U.S. authorities are also targeting lawyers, accountants, financial advisers, asset managers and those responsible for professional asset protection who “conspired” with U.S. taxpayers to commit tax evasion or other crimes. Apparently, the IRS may be seeking information all the way back to 2001.
LLB is Liechtenstein’s second largest bank. Tax problems for offshore bank account holders in Lichtenstein date back to 2008 when information stolen from LGT Group was used by German authorities to prosecute tax fraud.
The fallout extended to U.S. depositors at LGT who were investigated by the IRS. Since then the IRS has promoted several voluntary disclosure initiatives to attempt to convince U.S. persons who failed to file FBARs to settle up with the IRS. To date those programs have resulted in over 30,000 individuals making voluntary disclosures of the offshore bank accounts to the IRS. These programs have been accused by some tax lawyers as being too much stick and not enough carrot.
U.S. owners of these offshore accounts have difficult choices to make in a short period of time. Should they enter the IRS Offshore Voluntary Disclosure Program (OVDP) before it’s not too late? Should they appeal the turnover of information by LLB through the Liechtenstein court system? Should they wait and do nothing?
Each of these solutions has its own set of risks and rewards. Entering the OVDP will be expensive. Penalties of 27.5% of the offshore account balances can be expected. In addition, other non-financial assets may also be subject to the 27.5% penalty. Back taxes must be paid, generally going back to 2004. On top of that, expect additional penalties and interest.
On the other hand, not entering the OVDP can lead to FBAR penalties equaling 300% of the foreign bank account balances, as well as possible criminal tax evasion charges. The bottom line is that everyone’s situation is different, and only consultation with a tax lawyer experienced in these offshore issues will begin to help in coming to the right personal decision.