A Senate report in 2008 estimated that offshore accounts were being used by U.S. taxpayers to evade $100 billion in tax revenue annually. That same year, the U.S. Department of Justice’s (DOJ) Tax Division focused an investigation on UBS AG, the largest bank in Switzerland. By early 2009, UBS had entered into a deferred prosecution agreement (DPA), admitting participation in a conspiracy to impede the IRS’s collection of income tax. PursUBS paid the U.S. Treasury $780 million in fines, penalties, interest, and restitution. Eventually, UBS disclosed account information on thousands of customers who had maintained secret bank accounts.
By early 2013, the U.S. Attorney’s Office for the Southern District of New York had obtained a guilty plea from Wegelin Bank, the oldest private bank in Switzerland. Wegelin admitted to a similar conspiracy of assisting American taxpayers in maintaining secret bank accounts for the purpose of evading income tax. Today, nine Swiss banks have entered into what the Tax Division calls its “Offshore Compliance Initiative.”
The Tax Division recently announced that it is investigating banks in other countries, naming India and Liechtenstein. The DOJ has also focused on banks in the Caribbean and is active in other countries it has yet to publicly identify, according to an article published by Law360 reporting on remarks by Tax Division lawyers, given at the New York University School of Professional Studies tax-controversy forum in New York earlier this month.
The article points out that Tax Division lawyers emphasized that individual taxpayers are being prosecuted, including certain persons in the voluntary disclosure program. The article also reports that, earlier this month, Swiss banks Rothschild Bank AG and Banca Credinvest SA surrendered records to the Tax Division, identifying suspect U.S. taxpayers who had maintained previously undisclosed accounts at those banks.
—Michael T. Dawkins, Baker Donelson, Jackson, MS