IRS Prepares Enforcement Against at Least One Foreign Bank

Jun 14, 2011   

On June 7, 2011, Steven Miller, deputy commissioner for services and enforcement, announced the next IRS strike in its battle against offshore tax evasion. Miller stated that the agency is planning an enforcement action against one or more non-U.S. banks in the next month.

Over the last few years, the IRS and the Department of Justice have ramped up their efforts to combat offshore tax evasion. The agencies have been particularly vigorous about pursuing accounts held by Switzerlands UBS AG, London-based HSBC Holdings Pc, and Europes Credit Suisse Group AG. Since 2007, the U.S. has charged tax crimes against over two dozen UBS clients, four UBS bankers, three HSBC clients, and four other alleged offshore enablers.

In February 2009, the U.S. charged the UBS with helping U.S. citizens avoid taxes. To escape prosecution, the Swiss bank had to pay $780 million, admit that it fostered tax evasion, and hand over selected data to the IRS for 250 accounts. Soon after, the bank handed over data on another 4,400 accounts to settle an IRS lawsuit.

This February, four Europe-based bankers with Credit Suisse Group AG were also indicted for conspiring to help U.S. clients evade taxes. According to the indictment, the bank had thousands of undeclared accounts with $3 billion in assets. The bankers have not yet appeared in court.

In April, the U.S. filed a civil suit against HSBC seeking information about U.S. citizens who may have banked in India to keep their accounts hidden from the IRS. In a June 8 statement, HSBC maintained that it “does not condone tax evasion and fully supports the U.S. efforts to promote appropriate payment of taxes by U.S. taxpayers.” The bank pledged to cooperate with requests from U.S. authorities while complying with applicable law in its own jurisdictions.

You can read more about U.S. enforcement actions against undisclosed foreign bank accounts here and here.

The IRS held an initial voluntary disclosure program in 2009 whereby taxpayers could avoid prosecution by disclosing their offshore accounts. The taxpayers also had to reveal their bankers and advisers as well as how they moved their money. 15,000 taxpayers came forward between March and October 2009, followed by another 4,000 after October. The IRS is now running a second voluntary disclosure program to encourage more taxpayers to come forward and declare their accounts. Learn more about the Offshore Voluntary Disclosure Initiative here.

The attorneys at Fuerst Ittleman, PL have extensive experience in handling undeclared foreign bank accounts, undeclared income and voluntary disclosures. You can contact an attorney by emailing us at contact@fidjlaw.com.