One month ago, we included a story on our California blog about Swiss banks providing employee information to the U.S. government. That disclosure by five banks, including Credit Suisse, HSBC and others, instigated a furor among that country's banking community as many bankers perceived the release of their names as a betrayal of confidence.
Last month we discussed several tax law issues related to offshore bank accounts and a U.S. tax probe that targets Swiss banks. California taxpayers caught hiding money in foreign bank accounts can face civil and criminal penalties associated with the failure to disclose all foreign assets on federal income tax returns. The IRS has intensified its scrutiny of foreign countries with strict banking privacy rules because it believes that taxpayers in California and across the country are using foreign accounts for tax evasion purposes.
Although an offshore tax evasion investigation may be more alarming to an individual taxpayer, federal authorities also routinely target large financial institutions such as banks. Credit Suisse Group AG, one of the world's largest banks, is the most recent target of federal criminal probes into possible tax evasion.
An American who hid money from the Internal Revenue Service in an offshore bank account was recently sentenced to three years probation. The San Diego man also had to pay nearly $100,000 to settle his tax accounts with the IRS. He had failed to file Foreign Bank and Financial Reports, or FBARs.