Posted by: Taxlitigator | February 25, 2014

Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts


  1. Interesting excerpts from the Joint Statement of Deputy Attorney General James M. Cole and Assistant Attorney General, Tax Division, Kathryn Keneally before the PSI available at include:

    “Since 2009, the Department has publicly charged 73 account holders and 35 bankers and advisors with violations arising from offshore banking activities. Sixty-one account holders have pled guilty, seven were convicted at trial, and five await trial. Four bankers and financial advisors have pled guilty; many remain fugitives. Recently one banker, Raoul Weil, formerly the third-highest banking official at UBS, waived extradition following his arrest in Italy and is now awaiting trial in the United States. While the Department’s enforcement focused initially on cross-border activities in Switzerland, it has expanded to include wrongdoing by U.S. account holders, financial institutions, and other facilitators globally, including publicly disclosed enforcement concerning banking activities in India, Israel, Liechtenstein, Luxembourg, Barbados, and other Caribbean countries.

    . . .

    … the Department has on-going criminal investigations concerning the cross-border activities of banks and account holders, as well as bankers and other
    professionals who facilitated U.S. tax evasion and reporting violations. In August 2013, the Department publicly stated that investigations have been authorized of fourteen banks concerning the use of Swiss bank accounts. This is in addition to on-going investigations concerning cross-border activities by banks outside Switzerland. While we are not in a position to provide information regarding these non-public matters, the absence of public disclosure should not be construed as a sign of inactivity in this critical law enforcement area.

    . . .

    … the Department and the IRS engaged in a series of discussions with representatives of the Swiss government. Our central focus in these discussions was on obtaining information from the banks that would serve our law enforcement goals of encouraging voluntary disclosure by account holders, prosecuting account holders who fail to come forward, and learning where else in Switzerland and the world U.S. taxpayers attempted to use secret accounts to engage in tax evasion. We also sought to maintain the integrity of pending U.S. law enforcement matters and the ability to prosecute those persons who assisted U.S. taxpayers in evading the law.

    On August 29, 2013, the Department announced the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”), which is designed to encourage Swiss banks to cooperate in our ongoing investigations. . . . we also believe the Program is motivating culpable account holders to make voluntary disclosures of their accounts. First, the Swiss banks that participate in the Program will provide detailed information that is calculated to lead to the discovery of U.S. accountholders. Second, participating Swiss banks can reduce their penalties by showing that their account holders participated in an announced IRS Offshore Voluntary Disclosure Program or Initiative following notification by the bank of such a program or initiative; there have already been several public reports of communications to account holders by Swiss banks as a result of this provision. Finally, the Program requires cooperating Swiss banks to provide information that may lead our investigations to banks outside Switzerland, which sends a firm message to U.S. taxpayers with undisclosed accounts anywhere in the world that they should be concerned that their banks may be the next to come under investigation, adding to the pressure to disclose now.”

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