Zurich Insurance Non Prosecution Agreement
From January 1, 2008 to June 30, 2014, Zurich issued or issued certain insurance policies and accounts of U.S. tax payers that used their policies to evade U.S. taxes and reporting obligations. In particular, Zurich had approximately 420 U.S. policies, 127 with Zurich Life and 293 with Zurich International Life, for a total maximum value of approximately $102 million, for which U.S. tax customers did not prove that they had reported their policies to U.S. tax authorities. Some insurance policies may benefit from favourable tax treatment. However, the government stated that the Zurich Life and Zurich International Life AG policies, which are indirectly subsidiaries of Zurich Insurance Group AG, did not meet the minimum requirements, so the increase in capital under these policies was taxable. According to the United States, Zurich should have known that it had helped its U.S. clients conceal their ownership of unreported assets from the IRS.
This was what the Department of Justice said was the use of “offshore” insurance products to allow “tax evasion.” According to last week`s statement, the guidelines provided to U.S. clients, whose accounts were not certain minimum requirements that would have been necessary to qualify for favorable tax treatment under U.S. tax law. Those with foreign life insurance and related policies are now in the crosshairs. The Ministry of Justice (DOJ) has announced that it has entered into a non-follow-up agreement (NPA) with Zurich Life Insurance Co. (in Zurich, Switzerland and the Isle of Man) on foreign life insurance and similar products. In general, NPAs allow the foreign financial institution to avoid criminal prosecution in exchange for providing information on U.S. receivables and paying a hefty fine.
Under the AFN, Zurich Life will pay a fine of $5,115,000 in the United States. Although Zurich International Life was aware that some of these guidelines, which had minimal function to no risk reduction function and specialized investment options, were held by U.S. taxpayers, Zurich International Life did not act appropriately to ensure timely compliance with U.S. tax law by policyholders. In at least one case revealed by Zurich Life`s internal audit, a former U.S. citizen, who had pleaded guilty to a federal scam following the purchase of a Zurich International Life policy, used the insurance policy to conceal substantial assets, when he owed his victims about $900,000 in compensation. The fraud involves 420 life insurance contracts between 2008 and 2014 for a total of $102 million. Although last week`s Justice Department statement did not specify where the “clients of U.S. taxpayers” whose Zurich accounts were involved in the case lived, some expat industry experts said it was likely that at least some of them belonged to Americans living abroad, given that the life insurance options available to these American expatriates were traditionally and to some extent. – quite limited.