International Tax Evasion & Money Laundering – 2013 Update

For those U.S. taxpayers who do not pay tax on their earnings they face civil tax fraud and criminal tax evasion penalties (both fines and jail terms). If the untaxed earnings are from assets held offshore then criminal penalties increase geometrically and may include:

1) Willful Tax Evasion (IRC 7201)
2) Obstruction of Tax Collection (IRC 7212)
3) Conspiracy to Commit Tax Evasion (18 USC 371)
4) Filing a False Tax Return (IRC 7206)
5) Failure to file FBAR (TD 90-22.1) and FATCA (Form 8938) filings
6) Money Laundering
7) Wire Fraud
8) Mail Fraud

Eight separate felonies total over 85 years in jail.

Offshore tax evasion, i.e. untaxed earnings on undisclosed offshore assets, has become the focal point for U.S. government tax compliance prosecution:

1) In February 2009, Swiss bank UBS agreed to pay a $780million fine and entered into a deferred prosecution agreement (without admitting guilt) to resolve a U.S. Dept of Justice investigation.

2) In January 2013, Swiss bank, Wegelin, the oldest Swiss bank, announced it would close after pleading guilty in January to helping wealthy U.S. citizens avoid paying taxes ultimately resulting in a $74million fine.

3) In July 2013, Liechtenstein’s oldest bank, Landesbank AG, agreed to pay a $23.8million settlement to avoid criminal charges for opening and maintaining undeclared bank accounts for U.S. citizens.

4) On 8/16/13, Edgar Paltzer, a Swiss lawyer (and duel U.S.-Swiss citizen) accused of helping U.S. clients conceal millions of dollars in offshore accounts, at the Swiss bank, Bank Frey & Co. AG, pleaded guilty to conspiracy to commit tax fraud (after being charged in April 2013 on one count of conspiracy alongside Stefan Buck, then head of private banking at Bank Frey & Co Ag).

Paltzer entered into a criminal plea agreement and stated: “I was aware that this conduct was wrong.” He agreed to forfeit any fees he earned and cooperate with the U.S. government. His lawyer stated: “His cooperation is complete and without any limitation.” (U.S. v. Paltzer et al, U.S. District Court, Southern District of New York, No. 13-cr-282)

More than a dozen Swiss banks, including Credit-Suisse Group AG and Julius Baer continue to be investigated for their roles in helping U.S. taxpayers evade taxes. Swiss banks hoped to cooperate but have been stymied by strict Swiss secrecy laws.

In July 2013, the Swiss government unveiled a plan that would potentially allow the banks to cooperate with U.S. authorities who are seeking up to $10billion in penalties.

Tags:

Comments are closed.