A Swiss lawyer pleaded guilty in a U.S. probe of offshore tax evasion in August and has been telling prosecutors how he helped American clients use secret accounts to hide assets from the Internal Revenue Service. Edgar Paltzer, 57, admitted in federal court in New York that he conspired for more than a decade to commit tax fraud by helping U.S. clients hide millions of dollars. He was indicted on April 16 with a Swiss banker, Stefan Buck. Paltzer is cooperating with U.S. authorities in their broader investigation of how foreign banks and advisers helped American clients evade taxes, his lawyer, Thomas Ostrander, said.

 Paltzer’s assistance offers investigators a rare inside look at how Swiss bankers and advisers used sham trusts and corporations and moved cash and jewelry across borders to hide their assets from the IRS. Paltzer admitted that from 2000 to 2012 he acted as a financial intermediary, helping U.S. taxpayers escape taxes on worldwide income.

Hidden Accounts -“I intentionally formed foundations and corporations which permitted these U.S. taxpayers to hide from the IRS these accounts and the income earned in these accounts,” he told U.S. Magistrate Judge Ronald Ellis. “I assisted these taxpayers in violating their legal duties. I was aware that this conduct was wrong.” He admitted communicating with clients using code words such as “postcards” to refer to checks sent from an undisclosed account. Cowley said Paltzer helped dozens of U.S. taxpayers maintain undeclared Swiss accounts with “millions and millions of dollars in undeclared assets.” When some Swiss banks decided to close accounts amid the U.S. crackdown, Paltzer helped American taxpayers move accounts to other Swiss banks, he said.

 His more-detailed indictment describes his assistance to clients including a California woman who hid $3.1 million in an undeclared account she inherited from her father. The account was allegedly held at UBS in the name of a sham foundation in Liechtenstein. Paltzer helped the woman move the money to another Swiss bank, set up an “off-the-shelf corporation” in the British Virgin Islands, and sent her e-mails referring to checks sent from the account as “postcards,” prosecutors said. He allegedly helped another client in Connecticut repatriate millions of dollars through jewelry that he had delivered to him, including a $1.98 million ruby ring and $1.7 million in loose diamonds.

Bank Frey-Stefan Buck, who was indicted with Paltzer, was Bank Frey & Co.’s head of private banking in Switzerland and a member of the executive board, according to the bank. Zurich-based Bank Frey said at the time of the indictment it was “reviewing the legal situation that derives from the indictment brought against a member of its executive board.” From March 2009 to February 2012, Buck’s bank experienced an increase of about 300 percent in clients who were U.S. taxpayers, U.S. Attorney Preet Bharara in Manhattan said in a statement at the time of the indictment. As of Sept. 30, the bank had about 2 billion Swiss francs ($2.17 billion) in assets under management, according to the indictment. About 882.5 million francs, or 44 percent of the total, was held on behalf of U.S. taxpayers living in the U.S., he said.

FBAR-Mandatory Efiling as of July 1, 2013

As of July 1, 2013 Form TD F 90-22.1 Report of Foreign Bank and Financial Reports, commonly known as FBAR, must be filed electronically. Most tax software prepares the Form TD F 90-22.1 Report of Foreign Bank and Financial Reports and the input screen is usually the entrance to adding additional information to support Form 8938, Statement of Specified Foreign Financial Assets. As this time the FBAR that is generated with the tax return cannot be efiled with FinCen. Consequently, tax preparers, or their clients, will be required to separately go the FinCen website and manually re-enter the same information.

The following is a summary of frequently asked questions about mandatory efiling from the Financial Crimes Enforcement Network (FinCEN) website.

Why is FinCEN mandating E-Filing? In an effort to improve efficiency, reduce government and industry costs, and enhance the ability of FinCEN, law enforcement, and regulators to gain better and timelier access to important financial information, the Financial Crimes Enforcement Network (FinCEN) is requiring the electronic filing of certain FinCEN reports. Additionally, BSA E-Filing allows organizations or individuals to electronically and securely file discrete and batched FinCEN reports. It also allows a registered user to send secure messages to FinCEN (and receive responses where appropriate).

Is there a cost to participating in BSA E-Filing? No, the BSA E-Filing system is free.

What happens if a paper report is submitted after the July 1, 2013, electronic deadline? FinCEN may impose civil money penalties for noncompliance with our regulations,

What steps must be taken to register for E-Filing? Visit the BSA E-Filing System. Click Become a BSA E-Filer and follow the instructions in order to enroll yourself as an individual FBAR filer.  For other technology-related questions specific to E-Filing, please call the BSA E-Filing Help desk at 1-866-346-9478. FinCEN has additionally prepared an instructional presentation on how to file electronically.

Pursuant to the requirements relating to practice before the Internal Revenue Service, any tax advice in this communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties imposed under the United States Internal Revenue Code, or (ii) promoting, marketing or recommending to another person any tax related manner.

The tax advice given by this column is, by necessity, general in nature. You should, of course, check with your own U.S. tax consultant as to how specific transactions affect you since tax advice varies with individual circumstances.