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Feds threaten to prosecute Swiss bankers for aiding tax evasion

With the current poor economy, combined with a political climate hostile to both taxes and government spending, it is no surprise that the federal government has found a renewed interest in collecting all tax revenues that are due, from any source. Tax evasion has always been a crime, but now rooting it out and collecting unpaid taxes has become almost a crusade.

It is in that context that the federal government has sought to eliminate the practice of hiding taxable revenue abroad in undeclared offshore bank accounts, particularly those in Swiss banks. The U.S. government has taken steps to criminally prosecute Swiss banks for helping Americans hid money in Switzerland and other countries where Swiss banks have branches.

Recent negotiations between the U.S. government and Swiss authorities have broken down over the issue of criminal prosecution of individual Swiss bankers involved in helping Americans shelter money from the Internal Revenue Service. The U.S. wants to preserve its ability to prosecute bankers if it has sufficient evidence of criminal wrongdoing. The Swiss insist that individual bankers must be protected from the possibility of criminal charges.

It remains to be seen whether Swiss bankers could be on the hook for aiding tax evasion, but Orange County tax attorneys will tell you that the IRS and the Justice Department have had no trouble finding and prosecuting Americans who have been hiding money in undeclared offshore accounts.

Recent prosecutions for hiding money offshore include the case of a doctor who put more than $8 million in an undeclared HSBC account in India, and also failed to report more than a million dollars of interest earned on the account.

Another prosecution was of a disbarred lawyer (not a tax lawyer), who pled guilty to hiding nearly $25 million with the Swiss bank UBS. He made a deal in which he agreed to pay nearly $10 million in penalties. He could go to prison for up to three years when sentenced.

Source: AmLaw Daily "The U.S. Government's Offshore Tax Crackdown, Writ Large and Small" 6/29/2011

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