Switzerland is expected to make changes to its banking laws that will make it more difficult for European neighbors to hide their assets from tax collectors. The proposed agreement with Germany and Britain, expected to be reached by the summer of this year, is intended to preserve banking secrecy, but marks a shift away from undeclared assets. France and Italy are expected to reach similar deals with Switzerland thereafter.
Switzerland is seeking to avoid recurrences of some of the more contentious responses to the problem of banking secrecy for foreign tax collectors, such as the lawsuit between the IRS and UBS that resulted in a payment of $780 million, Swiss bankers being arrested abroad, and the theft and sale of Swizz bank client lists to foreign governments that wish to collect taxes legally owed to them.
The shift in Switzerland’s banking will likely result in the downsizing or consolidation of some firms that rely solely on undeclared assets. Although client confidentiality will be retained under the proposed agreement, Swiss banks will likely be forced to compete in a more transparent environment, the results of which are only beginning to unfold.
Friday, April 22, 2011
Monday, April 11, 2011
IRS to focus on tax evasion schemes in India
The IRS is now considering India among the countries believed to be facilitating major off-shore tax evasion for wealthy Americans, as indicated by the Justice Department’s efforts to acquire the names Indian-American HSBC clients suspected of evading taxes through offshore banking in India.
The request for permission from a federal Judge by the Justice Department to demand those names comes on the heels of a protracted legal engagement with UBS in Switzerland. That action began in 2008 and ended last August with the agreement by UBS to provide information on 4,500 American clients. The IRS is now expanding its anti-fraud efforts to India, a region not previously considered a hotbed for offshore evasion.
According to the New York Times, sources close to the matter indicate that HSBC’s N.R.I. program (Non-Resident Indian), which sought out Indian-Americans for banking in India, may be related to the current legal effort. HSBC has indicated that it does not condone tax evasion, and will cooperate with US requests “while complying with the law in all jurisdictions in which it operates, including India.”
The request for permission from a federal Judge by the Justice Department to demand those names comes on the heels of a protracted legal engagement with UBS in Switzerland. That action began in 2008 and ended last August with the agreement by UBS to provide information on 4,500 American clients. The IRS is now expanding its anti-fraud efforts to India, a region not previously considered a hotbed for offshore evasion.
According to the New York Times, sources close to the matter indicate that HSBC’s N.R.I. program (Non-Resident Indian), which sought out Indian-Americans for banking in India, may be related to the current legal effort. HSBC has indicated that it does not condone tax evasion, and will cooperate with US requests “while complying with the law in all jurisdictions in which it operates, including India.”
IRS releases “Dirty Dozen” list of worst tax scams for 2011
The IRS has produced a “Dirty Dozen” list of 12 fraudulent and illegal tax schemes, representing “the worst of the worst” in tax scams, according to IRS Commissioner Doug Schulman.
Among the scams included in the list are: hiding income offshore, identity theft and phishing, return preparer fraud, filing false of misleading forms, frivolous arguments, nontaxable social security benefits with exaggerated withholding credit, abuse of charitable organizations and deductions, and abusive retirement plans.
The IRS warns that while such activities may appear to present opportunities to retain wealth illegally by defrauding the government, these scams frequently result in heavy fines, full repayment of taxes (plus interest), and often jail time.
Among the scams included in the list are: hiding income offshore, identity theft and phishing, return preparer fraud, filing false of misleading forms, frivolous arguments, nontaxable social security benefits with exaggerated withholding credit, abuse of charitable organizations and deductions, and abusive retirement plans.
The IRS warns that while such activities may appear to present opportunities to retain wealth illegally by defrauding the government, these scams frequently result in heavy fines, full repayment of taxes (plus interest), and often jail time.
Friday, March 18, 2011
Former UBS client pleads guilty to offshore tax evasion
Richard Werdiger, a former client of Zurich-based UBS AG, has pleaded guilty to concealing assets from the IRS in offshore bank accounts.
The 63-year-old is one of 7 former UBS clients believed to have concealed over $100 million from the IRS. Werdiger was accused of hiding $7 million in 3 accounts in Panama and Lichtenstein.
The former UBS client has agreed to pay $3.5 million in civil penalties and faces up to 20 years in prison when he is sentenced on June 14. The accusations form part of a larger IRS crackdown on offshore tax evasion, which has previously made UBS a focus of interest.
The 63-year-old is one of 7 former UBS clients believed to have concealed over $100 million from the IRS. Werdiger was accused of hiding $7 million in 3 accounts in Panama and Lichtenstein.
The former UBS client has agreed to pay $3.5 million in civil penalties and faces up to 20 years in prison when he is sentenced on June 14. The accusations form part of a larger IRS crackdown on offshore tax evasion, which has previously made UBS a focus of interest.
Friday, March 11, 2011
IRS offers information on offshore tax amnesty program in eight new languages
The IRS has released information on its 2011 Offshore Voluntary Disclosure Initiative in several languages, following requests from taxpayers and tax professionals to make the program more accessible to persons who primarily speak non-English languages.
Information on the new amnesty program is now available in Chinese (traditional and simplified), Farsi, German, Hindi, Korean, Russian, Spanish, and Vietnamese. The program creates an incentive for persons owing taxes to the IRS on hidden offshore accounts to come forward and pay their fines, by offering amnesty from some of the harsher penalties that could be applied.
A similar version of this program was offered last year and resulted in thousands of self-disclosures. This current program is less forgiving of tax cheats than the first iteration, but still offers ample motivation for persons guilty of offshore tax fraud to pay their fines and forgo potentially harsher punishment.
Information on the new amnesty program is now available in Chinese (traditional and simplified), Farsi, German, Hindi, Korean, Russian, Spanish, and Vietnamese. The program creates an incentive for persons owing taxes to the IRS on hidden offshore accounts to come forward and pay their fines, by offering amnesty from some of the harsher penalties that could be applied.
A similar version of this program was offered last year and resulted in thousands of self-disclosures. This current program is less forgiving of tax cheats than the first iteration, but still offers ample motivation for persons guilty of offshore tax fraud to pay their fines and forgo potentially harsher punishment.
Friday, March 4, 2011
Government crackdown on tax attorney fraud continues
The US Justice Department has accused Scott Waage, a tax lawyer in San Diego, of using illegal tax schemes to withhold $10.8 million in clients’ assets that should have been paid to the IRS.
The complaint alleging Waage’s use of fraudulent tax shelters comes on the heels of another complaint filed against attorneys Charles Klink and Caleb Grodsky, who allegedly used an illegal tax scheme designed to help them avoid paying corporate taxes on income generated from the sale of their clients' business assets, according to the National Law Journal (subscription required).
According to the complaint, Waage advertised himself as a “visionary tax attorney.” He started his own law firm, now titled Strategic Law Group, which allegedly promoted illegal tax schemes that Waage used (for his own assets as well as those of his clients) to defraud the government of millions of dollars.
The complaint alleging Waage’s use of fraudulent tax shelters comes on the heels of another complaint filed against attorneys Charles Klink and Caleb Grodsky, who allegedly used an illegal tax scheme designed to help them avoid paying corporate taxes on income generated from the sale of their clients' business assets, according to the National Law Journal (subscription required).
According to the complaint, Waage advertised himself as a “visionary tax attorney.” He started his own law firm, now titled Strategic Law Group, which allegedly promoted illegal tax schemes that Waage used (for his own assets as well as those of his clients) to defraud the government of millions of dollars.
Friday, February 25, 2011
US pursuit of tax fraud scheme providers continues in Switzerland
Arrest warrants were issued following the Wednesday indictment of four bankers believed to have been hiding as much as $3 billion from the IRS.
Although all four bankers are employed by the Zurich-based Credit Suisse Group, the bank itself was not charged in the indictment. However, the indictment states that bank officials "knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes."
The US government alleges that the fraud goes back to as far as 1953, and that in 2008, Credit Suisse was maintaining thousands of hidden accounts for US customers. Additionally, the indictment claims that that the fours bankers encouraged clients not to participate in President Obama’s tax amnesty program last year.
The AP notes that this is the first major criminal prosecution not involving Swiss-based UBS AG. In that landmark case, the UBS turned over thousands of names and paid a $780 million fine for helping US citizens conceal assets from the IRS.
Although all four bankers are employed by the Zurich-based Credit Suisse Group, the bank itself was not charged in the indictment. However, the indictment states that bank officials "knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes."
The US government alleges that the fraud goes back to as far as 1953, and that in 2008, Credit Suisse was maintaining thousands of hidden accounts for US customers. Additionally, the indictment claims that that the fours bankers encouraged clients not to participate in President Obama’s tax amnesty program last year.
The AP notes that this is the first major criminal prosecution not involving Swiss-based UBS AG. In that landmark case, the UBS turned over thousands of names and paid a $780 million fine for helping US citizens conceal assets from the IRS.
Subscribe to:
Posts (Atom)