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U.S. Government Focus Shifts to International Tax Evasion 2023
U.S. Government Focus Shifts to International Tax Evasion
While there are many different types of tax crimes that a US Taxpayer can commit, tax evasion is one of the most well-known types of criminal tax violations that the US Government seeks to prosecute. And, unlike other types of tax crimes that can be considered either a misdemeanor or a felony, tax evasion is a felony — and may result in both significant monetary fines as well as incarceration. Tax evasion spans all different types industries, including employment tax, sales tax, cryptocurrency, and international slash offshore tax evasion. As part of the recent US tax enforcement protocols, the Department of Justice has made it known that they have every intention of pursuing offshore tax evasion. Taxpayers who may be willful and who are out of compliance for international information reporting such as FBAR and FATCA may want to consider the IRS voluntary disclosure program if they are concerned that they might being criminal violation of the law.
Tax Division, Department of Justice
As provided by the Tax Division from the Department of Justice (DOJ)
Offshore Tax Evasion.
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For Tax Division’s criminal enforcement sections, one of the top litigation priorities is identifying, investigating, and holding accountable U.S. taxpayers who conceal foreign financial accounts in an effort to evade U.S. reporting and tax obligations. Use of foreign tax havens by U.S. taxpayers has been on the rise, aided by increasingly sophisticated financial instruments and the ease of moving money around the globe, irrespective of national borders.
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While the Division’s enforcement focused initially on cross-border activities in Switzerland, it has expanded to include wrongdoing by U.S. accountholders, financial institutions, and other facilitators globally, including publicly disclosed enforcement concerning banking activities in India, Israel, Liechtenstein, Luxembourg, Belize, Hong Kong, and the Caribbean. Through the Swiss Bank Program, the Department has entered into 80 Non-Prosecution Agreements (NPA) with 81 banks that collectively paid more than $1.6 billion in penalties and are providing valuable leads concerning U.S. taxpayers maintaining secret accounts.
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The Program encouraged Swiss banks, about which the Department had little or no information, to come forward, disclose conduct and account information related to U.S. offshore accounts, and to cooperate with ongoing offshore enforcement efforts to target U.S. accountholders and the bankers and advisers who facilitated them. The Program continues to generate investigative leads and information helpful to ongoing cases. Notable offshore tax evasion cases include:
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In March 2021, Rahn+Bodmer, Zurich’s oldest private bank, entered into a Deferred Prosecution Agreement (DPA) and agreed to pay $22 million in restitution, forfeiture, and penalties, and will cooperate with the DOJ and the IRS.
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In April 2020, Bank Hapoalim (Switzerland) Ltd. pleaded guilty and Bank Hapoalim B.M., Israel’s largest bank, entered into a DPA for conspiring with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts. As part of the resolution, Bank Hapoalim B.M. and Bank Hapoalim (Switzerland) Ltd. (BHS) agreed to pay approximately $874.27 million to the U.S. Treasury, the Federal Reserve, and the New York State Department of Financial Services.
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In August 2019, LLB Verwaltung (Switzerland), a Swiss-based private bank formerly known as “Liechtensteinische Landesbank (Schweiz) AG,” entered into an NPA with the Department and paid a $10.6 million penalty for assisting U.S. taxpayers to commit tax evasion.
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In 2013, LLB-Switzerland was closed, and its banking license returned to the Swiss Financial Market Supervisory Authority. The Tax Division’s efforts extend beyond banks.
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In April 2021, one of Switzerland’s largest insurance companies, Swiss Life Holding AG, and subsidiaries in Liechtenstein, Switzerland, and Singapore, entered into a DPA with the Department of Justice and paid $77.7 million pursuant to the agreement.
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In April 2019, Zurich Life Insurance Company Ltd. and Zurich International Life Limited entered into a NPA with the Department of Justice and paid $5.1 million pursuant to the Agreement. The companies used insurance products, sold to U.S. taxpayers, that enabled those taxpayers to commit tax fraud. The investigation and prosecution of professionals, including lawyers, financial advisors, and return preparers, who facilitate offshore tax evasion is an essential part of the Tax Division’s efforts in this area.
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The Department has publicly charged approximately 42 bankers and advisors with violations arising from offshore banking activities; many remain fugitives. Furthermore, over 120 accountholders have pleaded guilty or been convicted at trial.
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In March 2022, a former defense contractor from Colorado Springs pleaded guilty to evading more than $1.5 million in federal income taxes from 2012 to 2019. James Robar failed to report approximately $5.5 million in compensation and attempted to hide his employer’s bonus payments in an offshore corporate bank account.
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In May 2021, a Florida man who owned an agriculture machinery business was sentenced to 24 months in prison for evading more than $2.7 million in income taxes by keeping nearly $7.7 million in unreported compensation at financial institutions in Croatia, Germany, Serbia, and Switzerland. He was also ordered to pay $2,789,538 in restitution.
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The high-profile prosecutions of financial institutions, facilitators, and accountholders created pressure on non-compliant taxpayers to correct their tax returns to report previously undisclosed accounts. According to the IRS, since the inception of the investigation against UBS, over 55,800 taxpayers have reported previously secret accounts through the IRS’s offshore voluntary disclosure programs, and an additional 48,000 have made use of separate streamlined procedures to correct prior non-willful omissions. In total, the IRS has collected more than $11 billion in back taxes, interest, and penalties through these programs. These enforcement efforts not only remedy past wrongdoing, but also bring into the system tax revenue from taxpayers who become compliant going forward.
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Through the voluntary disclosure programs, taxpayers are required to cooperate, providing leads on banks and facilitators. International Cooperation to Investigate Tax Evasion. The Tax Division regularly provides advice and assistance to AUSAs and IRS agents seeking extradition, information, and cooperation from other countries for both civil and criminal tax investigations and cases. The Tax Division also assists attorneys from other federal agencies and offices, including the FBI, the Securities Exchange Commission, and the Department of Homeland Security as needed.
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Need Help Finding an Experienced Offshore Tax Attorney?
When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.
Important Links:
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.
Contact our firm today for assistance.