IRS says set to pursue “other banks” on tax evasion
By Tom Brown, Reuters.com
The U.S. Internal Revenue Service (IRS) is preparing to pursue other foreign banks for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland’s UBS AG, an IRS official said on Monday.
UBS, Switzerland’s largest bank, in February acknowledged that it helped U.S. clients conceal assets from the U.S. government. It agreed to pay a $780 million fine and identify some of its American clients.
But U.S. authorities are still going after the Swiss bank, seeking to access the data of another 52,000 Americans they say are hiding about $14.8 billion in Swiss bank accounts.
“We are developing John Doe summonses on other banks,” Daniel Reeves, an agent with the IRS’ Offshore Compliance division, told Reuters on the sidelines of a conference in Miami on offshore finance.
He was referring to the kind of subpoena filed by the IRS against UBS seeking to force the bank to turn over the names of clients suspected of evading U.S. taxes.
Reeves declined to say which, or how many, other banks could face cases filed by the IRS, but he confirmed the entities being investigated were foreign-based like UBS.
“We have identified other offshore banks that are engaged in similar activities,” he earlier told the conference.
On April 2, U.S. authorities arrested and charged an accountant in Florida in the first of what they said could be a series of tax evasion prosecutions of American clients of UBS.
Almost two weeks later, a wealthy Florida yacht broker pleaded guilty to using an account with UBS to hide more than $3 million in assets from the U.S. government.
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First Client From U.S. Is Arrested in UBS Case
By LYNNLEY BROWNING, The New York Times
Federal authorities have arrested a wealthy American client of the Swiss bank UBS on charges of tax evasion.
The client, Steven Michael Rubinstein, an accountant, was arrested in Boca Raton, Fla., and charged with one criminal count of filing a false and fraudulent tax return, according to court papers unsealed on Thursday.
The arrest is the first of an American client of UBS, which has been under criminal investigation for helping scores of wealthy Americans evade taxes through secret offshore accounts that went unreported to the Internal Revenue Service. It signals that federal authorities are making good on a promise to pursue American clients suspected of tax evasion, and in some cases to make indictments.
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I.R.S. to Ease Penalties for Some Offshore Tax Evaders
By Lynnley Browning, The New York Times
The Internal Revenue Service, under pressure to bring in money to the faltering economy, plans to give offshore tax evaders a big break.
The agency announced on Thursday a plan that lowers a penalty levied on wealthy Americans who stash billions of dollars overseas to evade taxes.
In another shift, the I.R.S. will generally not prosecute taxpayers who come forward voluntarily, provided they are not drug dealers, arms merchants or others with ill-gotten gains. And it will not assess a 35 percent penalty on money secretly transferred to foreign trusts - a common method of tax evasion.
The goal, Douglas Shulman, the I.R.S. commissioner, said during a briefing “is to get taxpayers who have been hiding assets offshore back into the system.”
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UBS, Extending its Shake-Up, Ousts Kurer
By CARRICK MOLLENKAMP, The Wall St Journal
In its second top-management change in a week, UBS AG replaced Chairman Peter Kurer, a move that came as the Swiss bank’s board worried that Mr. Kurer had lost credibility in steering the bank through a series of crises, according to people familiar with the situation.
Mr. Kurer will be succeeded by former Swiss Finance Minister Kaspar Villiger, who will run the bank alongside new Chief Executive Oswald Grübel, who took over for Marcel Rohner on Feb. 26.
The moves come on the heels of a long stretch of bad news at UBS, including a U.S. tax-evasion investigation; the largest annual loss ever reported by a Swiss company; the elimination of 11,000 jobs; and the need for a Swiss government bailout.
Under the new management team, Mr. Villiger is expected to handle governmental issues that could include dealing with the U.S. government investigation. Mr. Grübel will run day-to-day operations, a role that may include driving further cost-cutting and possibly more executive changes.
The shake-up came as a senior UBS banker apologized at a U.S. Senate hearing in Washington for the bank’s role in aiding tax evasion by its wealthy American clients.
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United States of America v. UBS AG (Declaration of Daniel Reeves)
Filed under: IRS, UBS, int tax compliance, offshore trusts, tax evasion, tax haven, unreported income
The following 305 page IRS affidavit is the Declaration of Daniel Reeves, a duly commissioned Internal Revenue Agent and Offshore Compliance Technical Advisor employed in the Small Business/Self Employed Division of the Internal Revenue Service. He is assigned to the Internal Revenue Service’s Offshore Compliance Initiative. The Offshore Compliance Initiative develops projects, methodologies, and techniques for identifying US taxpayers who are involved in abusive offshore transactions and financial arrangements for tax avoidance purposes.
UBS Clients Prepare For The Worst
by Vidya Ram, Forbes.com
LONDON - UBS has pledged to fight against the Internal Revenue Service’s demand that it spill details of 52,000 clients suspected of having secret Swiss bank accounts. But its clients are preparing for the worst.
Some clients are already beginning to approach the IRS under its voluntary disclosure program. “We have been going to the IRS without giving names and explaining we represent the clients, to get assurances from the IRS that if they come forward and declare those assets they will not be prosecuted criminally,” says lawyer Ken Rubinstein, of New York-based Rubinstein & Rubinstein. “Unless they already have the client’s name, the IRS is agreeing to treat it as a civil matter.” Several other clients are converting their foreign accounts that aren’t compliant with U.S. law.
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U.S. Sues UBS Seeking Swiss Account Customer Names
Filed under: IRS, UBS, tax evasion, tax haven, unreported income
By David Voreacos and Carlyn Kolker, Bloomberg.com
The U.S. government sued UBS AG, Switzerland’s largest bank, to try to force disclosure of the identities of as many as 52,000 U.S. customers with secret Swiss accounts.
The lawsuit, filed today in federal court in Miami, alleges that 32,000 secret accounts contained cash and 20,000 held securities, according to the statement. U.S. customers failed to report and pay U.S. income taxes on income earned in those accounts, which held about $14.8 billion in assets in the mid- 2000s, according to a statement from the Justice Department.
The case is U.S. v. UBS AG, 09-20423, U.S. District Court, Southern District of Florida (Miami).
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U.S. Is Said to Expand Tax Inquiry
By LYNNLEY BROWNING, The New York Times
The Justice Department has expanded its criminal investigation into foreign banks that sell offshore private banking services to include Credit Suisse and HSBC, according to people briefed on the matter.
The investigation into the two European banks is an outgrowth of an inquiry by federal prosecutors and regulators into UBS, the Swiss bank giant, over its sale of offshore banking services to wealthy Americans. Federal prosecutors, who are focusing on senior and midlevel executives and bankers at UBS, contend that UBS illegally helped American clients hide up to $20 billion in secret offshore accounts, thereby evading $300 million a year in taxes from 2000 to 2007.
HSBC, which is based in London and is Europe’s largest bank, is a global financial giant with large retail, private, asset management and investment banking operations across the United States and Asia. Credit Suisse, which is based in Zurich, is also one of the world’s largest private banks, with significant operations in the United States.
The investigation into HSBC and Credit Suisse began about September and is focusing on whether the two banks helped wealthy American clients hide up to $30 billion in offshore accounts that went undeclared to the Internal Revenue Service, the people briefed on the matter said. Prosecutors are examining whether the two banks illegally helped their American clients use those offshore accounts to evade United States taxes and whether the clients themselves violated United States laws.
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I.R.S. Debates Way to Deal With Foreign Tax Shelters
New York Times (12/3/08) is reporting the following:
The Internal Revenue Service is debating how to settle tax disputes with scores of wealthy American clients who use offshore private banking services sold by UBS and other foreign banks, according to lawyers who represent those clients.
The unusual discussion, which has reached the highest levels of the agency in recent weeks, centers on the question of the steep penalties — 50 percent annually of the sums parked in each account — typically levied on money hidden offshore. Clients who used undeclared accounts for years can owe the I.R.S. many times what those accounts hold, even before back taxes and interest.
The debate has swelled amid an investigation by the Justice Department into offshore private banking services sold by UBS, the world’s largest private bank, Credit Suisse and HSBC.
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OC billionaire sues UBS in tax case
SANTA ANA, Calif.—An Orange County billionaire who pleaded guilty to filing a false tax return involving foreign banking accounts filed a lawsuit alleging Swiss bank UBS AG duped him into skirting U.S. tax laws.
Real estate developer Igor Olenicoff filed the lawsuit Tuesday in U.S. District Court in Santa Ana, accusing the bank of telling him his fortune would be invested in accordance with U.S. tax laws then hiding it in offshore entities.
The lawsuit carries similar accusations against financial entities in Liechtenstein, where UBS allegedly moved Olenicoff’s $200 million in investments.
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