1. DOJ Attacks Offshore Accounts!
The Department of Justice (DOJ) has announced that its investigation of offshore tax evasion will expand to include Europe's largest bank, HSBC in London, and Credit Suisse in Zurich. The increasing scrutiny of illegal offshore tax schemes comes as the Wall Street bailout and turmoil in the banking and financial services industries generate more interest in IRS Whistleblower Program claims.
DOJ and IRS continue to investigate UBS, Switzerland's largest bank. Scrutiny of Credit Suisse and HSBC reportedly includes whether the two banks may have helped U.S. clients hide up to $30 billion from U.S. tax authorities. The IRS and DOJ investigations highlight differences in U.S. and Swiss law. Switzerland does not criminalize routine tax evasion, and bank secrecy rules in Swizerland prohibit disclosure of account holder information in these cases.
U.S. officials have already obtained previously "secret" UBS bank information reportedly revealing that some 20,000 U.S. citizens have maintained offshore accounts with UBS, and that approximately 17,000 of those accounts were never disclosed to the IRS. Estimates of willful tax evasion of $300 million per year have been reported previously. As part of the settlement, the bank has agreed to identify between 250 and 300 clients to the US Internal Revenue Service.
A second suit, involving accounts with a total value of $14.8 billion €11.74 billion), was filed hours after the bank agreed to pay a record $780 million (€618.41 million) fine for helping 17,000 clients hide $20 billion (€15.9 billion) in assets from the US authorities. This second suit is interpreted by some analysts in Switzerland as the beginning of the end of its banking secrecy laws.
The investigations into Bernard L. Madoff and L. Alan Stanford are also expanding into offshore tax havens as investigators believe that some of Mr. Madoff and Mr. Stanford’s investors used funds based in offshore tax havens to evade American taxes.