Thursday, November 6, 2014

Report Finds Some of World’s Biggest Companies Use Tax Havens to Avoid Taxes

International giants including Pepsi, IKEA and FedEx have saved billions in taxes by funneling money through Luxembourg, claims a report by the Washington, DC-based International Consortium of Investigative Journalists (ICIJ).

ICIJ, a global network of 185 reporters in 65 countries who collaborate on transnational investigations, reviewed 28,000 pages of leaked confidential documents to come up with its findings. According to the journalists’ report, big companies create a complicated accounting and legal structure that allows for movement of profits from high-tax countries to lower-tax countries – some with tax rates below 1 percent.

“The private deals are legal in Luxembourg but may be subject to legal challenges outside of the country,” says a Huffington Post article. The European Union has been going back and forth with Luxembourg over whether the country has to disclose tax deals that might violate European law.

As the EU probes continue, the multinational group the Organization for Economic Cooperation and Development is proposing new rules that would prevent companies from using common practices to shift profits into countries considered “tax havens.”

UBS Exec Acquitted of Helping Americans Evade $20B in Taxes

A former UBS AG executive Raoul Weil was found not guilty of conspiring with US clients to hide $20 billion from the IRS in secret international bank accounts. “Weil was the highest-ranking Swiss banker prosecuted under an IRS and Justice Department crackdown on Americans’ use of offshore accounts to dodge U.S. taxes,” reports the Associated Press.

The verdict comes as a blow to the US government, which has been increasingly pursuing international banks and Americans who use offshore accounts to dodge taxes. It also was surprising: In 2009 UBS paid a $780 million US fine for helping US citizens avoid taxes. The Swiss banking giant disclosed thousands of American account holder names, many of whom were later prosecuted by the IRS.

Testimony against Weil detailed the lengths to which the banker supposedly went in order to conceal wrongdoing. Weil allegedly kept sensitive client data under a “solitaire” game tab on an encrypted laptop with an emergency password that would delete any trace of the customer’s data if it was seen by the wrong person.

A DOJ spokesperson said that, despite the verdict, the US government will continue pursuing banks, and their executives, suspected of helping wealthy Americans avoid billions in taxes.

For more commentary on the verdict see Newsweek,  The Wall Street Journal and CNBC.

Friday, October 17, 2014

Trial Starts for Former UBS Executive in Tax Fraud Case

The trial of UBS AG’s former chief executive Raoul Weil started this week in Florida. He is accused of helping American clients avoid taxes and conceal $20 billion of US taxpayers’ assets in offshore accounts. Weil is the highest-ranked UBS executive to be prosecuted by the US.

The Swiss banker allegedly helped “black account” holders – American citizens who didn’t want their assets disclosed to the IRS – hide millions of dollars and charged them steep fees for the extra service. Weil and other UBS bankers used multiple credit cards, changed hotels often and avoided electronic communication with clients, claims the prosecution’s star witness, Hans Schumacher, who was a banker at UBS.

The trial is expected to last several more weeks. If convicted, Weil could face up to five years in prison. (Alleged Mastermind of UBS Tax Evasion Scheme Faces Trial)

Friday, October 10, 2014

NJ man sentenced to prison for $65 million tax scheme

A New Jersey man has been sentenced to 17 months in prison for filing more than 8,000 fraudulent income tax returns that sought $65 million from the government. David Pinski and a handful of others conducted the largest and longest running stolen identity refund fraud scheme to have been identified, and resulted in a loss of $12 million to the U.S. government.

Pinski obtained personal identifies of Puerto Rican citizens and used that information to file electronic 1040s. He and his co-conspirators then received the fraudulent tax refund checks, cashed and spent them. Some of the defendants gambled more than $250,000 at casinos, and “resided in a house worth more than $1.6 million” while supposedly working in a grocery store, says an article published by the Cliff View Pilot.

The fraud was discovered because the tax forms were filed electronically from a handful of traceable IP addresses.

Friday, June 20, 2014

Tax whistleblower news summary for week of June 16

The IRS announced changes to its offshore voluntary compliance programs this week, enforcing harsher restrictions on US citizens who deliberately dodge taxes through illegal actions, while easing penalties for citizens who unintentionally evade taxes. The revised programs include a 50 percent penalty on offshore accounts if there is publicity about the IRS or the Justice Department investigating a financial institution where the person holds an account. (IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance)

Friday, June 6, 2014

Tax whistleblower news summary for week of June 2

A U.S. Tax Court ruling this week keeps alive an IRS whistleblower case seeking a $9 million whistleblower reward. The whistleblower claims the IRS recovered $30 million as a result of information the whistleblower provided to the IRS. (United States Tax Court, Whistleblower 10949-13W)

Friday, May 23, 2014

Tax whistleblower news summary for week of May 19

Credit Suisse has agreed to pay $2.6 billion to the U.S. government, the highest fine ever paid in a criminal tax case by a bank. Credit Suisse pleaded guilty to helping U.S. taxpayers file false claims and evade taxes. Credit Suisse admitted to destroying documents and setting up fake accounts to help U.S. citizens avoid taxes. Another story: “Credit Suisse Fined $2.5 billion After Pleading Guilty to U.S. Tax Charge.”

The U.S. Tax Court will allow three IRS whistleblowers to remain anonymous as they appeal IRS decisions about their rewards. Two of the whistleblowers are allowed to maintain the seal on their complaints -- meaning their identities aren’t publicly known – because the judge agreed their fear of physical repercussions is justified. The third whistleblower argued that his identity should remain confidential to prevent financial retribution by the defendant.