World's richest tax cheats

With attention focused on European and U.S. investigations of individuals suspected of dodging taxes by hiding assets in Liechtenstein, Forbes magazine has compiled a list of the the world's richest tax cheats.

"To be included, an individual had to be convicted of tax evasion, or had to accept responsibility for the charges levied against him (as former Samsung Group Chairman Lee Kun-Hee did in April when he was indicted on charges of tax evasion and breach of trust)," says the article.

UBS apologizes, promises not to help U.S. residents with off-shore banking services

In an effort to repair UBS's damaged reputation, a senior executive of the Swiss bank apologized for any misconduct by the bank that might have occurred in helping wealthy Americans avoid taxes through off-shore accounts and said the bank would no longer offer off-shore banking services to U.S. residents.

At a hearing before the Senate permanent subcommittee on investigations, subcommittee members said they probably would consider legislation to deal with the problem of tax evasion through off-shore tax havens.

To read published accounts of the hearing, see Reuters, The New York Times or The Wall Street Journal.

Senate investigation finds offshore tax evasion costs U.S. $100 billion annually

A Senate subcommittee investigation released yesterday reports that the U.S. is losing $100 billion annually due to offshore tax evasion.

The report, by the Senate Permanent Subcommittee on Investigation, describes how Swiss bank UBS and LGT, owned by the royal family of Liechtenstein, helped wealthy individuals avoid U.S. taxes. It examines the practices of eight rich individuals in particular.

For news accounts about the report, see The Wall Street Journal and The New York Times.

IRS to tighten rules on foreign banks and U.S. investors

The Internal Revenue Service soon will require foreign banks in its "Qualified Intermediary" program to determine whether their clients are U.S. investors hiding behind foreign shell companies to improperly reduce tax rates or to avoid paying taxes, The New York Times reported today.

If they are, the newspaper said, the new rules will require banks to notify the IRS and withhold taxes on dividends in that account.

"These new rules, which are aimed at United States, not foreign, clients of the banks, would help to peel back some of the layers of banking secrecy that permeate tax havens from Switzerland to the Caribbean, where vast sums of money are hidden from the I.R.S.," according to the Times.

Former IRS informant now subject of complaint by another tax informant

A Miami-based newsletter is reporting that the Internal Revenue Service has opened up a new investigation into a former Cayman Islands-based banker-turned-informant after a one-time partner filed a claim under the IRS's informant reward program alleging tax fraud.

"Offshore Alert" says that the former partner also is suing the banker, John Mathewson, over a business disagreement.

A government case against Mathewson in 1999 resulted in the banker providing the IRS with extensive information about off-shore tax havens in the Caribbean. A federal prosecutor at the time called him "the most singularly important government co-operator in tax haven prosecutions in the history of the Internal Revenue Service.”