1 minute reading time (289 words)

CRACKDOWN BY U.S. GOVERNMENT ON SWISS PRIVATE PLACEMENT LIFE INSURANCE

On February 24, 2014, The Wall Street Journal reported that the IRS is investigating Swiss Private Placement Life Insurance (PPLI) companies in order to determine whether American citizens have been using PPLI to hide assets or otherwise evade taxes in the United States.  PPLI combines private banking and portfolio management into a life insurance structure.  This development is not surprising in light of the highly publicized crackdown by the U.S. Government against Swiss banks for their role in assisting Americans with tax evasion.

Swiss Life Holding AG (Swiss Life), the largest Swiss insurer offering PPLI, stopped accepting American clients in 2012, but maintains that any remaining American clients are fully compliant with U.S. tax requirements.  In an effort to reduce its exposure to American clients, Swiss Life actually returned funds to hundreds of American PPLI owners in December 2013.  The other companies named in the report, including Baloise Holding and Zurich Insurance Group, have either stopped or never accepted American clients.

What may surprise many American taxpayers is that certain foreign life insurance products, including PPLI, must be reported on a Report of Foreign Bank and Financial Accounts (FBAR) to the IRS on a yearly basis.  Failure to report a PPLI policy or to file an FBAR annually may result in substantial civil and possible criminal penalties to the taxpayer.  To encourage taxpayers to become compliant despite previous FBAR violations, the IRS has implemented the Offshore Voluntary Disclosure Program, which reduces the civil penalties and generally eliminates the risk of criminal prosecution.  Taxpayers with unreported foreign PPLI policies should consider utilizing this program, as the continued concealment of foreign accounts will be substantially more difficult as the Foreign Account Tax Compliance Act (commonly known a “FATCA”) takes effect.               

SENATE REPORT ON OFFSHORE TAX EVASION RELEASED
DELAWARE LAW TO PROTECT INTERESTS IN SINGLE MEMBER...

Seminars & Events:

April, 2017 - CELESQ
“An Asset Protection Planning Primer for Estate Planning, Tax and Creditors Rights Lawyers”
Live Web Cast
May 31 – June 1, 2017 - 

SOUTHPAC TRUST OFFSHORE PLANNING INSTITUTE CONFERENCE 2017, “Asset Protection in a Changing World” (31 May 2017) and “Questions & Answer Panel on Industry Challenges to Asset Protection Structures” (1 June 2017)
Las Vegas, Nevada

 

View More Recent Seminars and Events

Contact Information

Barry S. Engel
Email: info@engelreiman.com