Recent IRS actions indicate that non-disclosure of foreign accounts by U.S. citizens now goes far beyond scrutiny of those with offshore accounts in UBS AG, Switzerland's largest bank. According to various sources, the IRS is now conducting a criminal investigation - the extent of which is not yet known with certainty, but believed to be deep and wide-ranging - into the holdings of certain clients of the Hong Kong Shanghai Banking Corporation ("HSBC").
UBS was long the target of a Justice Department probe, and the bank admitted last year abetting tax evasion from 2000 to 2007 by hiding the untaxed money of American clients. UBS avoided prosecution by paying the IRS $780 million and agreeing to disclose the account data on several thousand clients.
The IRS is now closely examining that information, says Commissioner Douglas Shulman, "to identify financial institutions, advisers and others" who helped taxpayers avoid mandated tax payments. The IRS is greatly increasing staff overseas, particularly in Asia.
Kevin Downing, a senior attorney in the Justice Department's tax division, was in charge of the UBS probe. His recent comments strongly support the view of many that the IRS intends to crack down aggressively on offshore account holders who fail to disclose assets, globally and over the long-term.
"We just took down the largest private wealth management bank in the world," Downing said on June 18 at a tax conference in New York. "Do you really think we're going to have trouble doing the next one?"
Related Resource: businessweek.com "HSBC Clients With Asian Accounts Said to Face U.S. Tax Probe" July 5, 2010