USDOJ: Tax Division: Offshore Compliance Initiative

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The Tax Division's top litigation priority is the concerted civil and criminal effort to combat the serious problem of non-compliance with our tax laws by U.S. taxpayers using secret offshore bank accounts - a problem that a 2008 Senate report concluded costs the U.S. Treasury at least $100 billion annually. As part of a deferred prosecution agreement the Tax Division negotiated in 2009 with UBS AG, Switzerland's largest bank, as well as a 2009 agreement negotiated among the US, UBS, and the Swiss government to settle a civil summons enforcement proceeding brought by the Tax Division, the IRS is receiving, from UBS and from the Swiss, account information about thousands of the most significant tax cheats among the U.S. taxpayers who maintain secret Swiss bank accounts.

The prosecution results so far have been encouraging: To date, approximately 150 investigations of offshore-banking clients have been initiated, of which 36 client cases have been charged, with 31 guilty pleas having been entered, 2 convicted after trial, and 5 awaiting trial. A number of facilitators who helped clients hide assets offshore at UBS and other banks have been indicted, resulting in 13 bankers and 2 attorneys being charged and awaiting trial, and one advisor and one banker being charged and convicted. In addition, investigations have been opened into numerous additional offshore banks across the world.

But the outcome cannot be measured in litigation results alone. This enforcement effort has dealt fabled Swiss bank secrecy a devastating blow and provided tools that should yield information on thousands of additional U.S. offshore account holders who have undisclosed accounts at UBS and other banks. Moreover, the publicity surrounding the Tax Division's enforcement action and the subsequent settlement has already produced dramatic behavior changes. The IRS credits these two agreements with prompting an unprecedented number of taxpayers - nearly 18,000 in the 18-month period concluding in February 2011, in contrast to the fewer than 100 typical in previous years - to "come in from the cold" and voluntarily disclose to the IRS their previously hidden foreign accounts and also to agree to pay hundreds of millions of dollars to the U.S. Treasury. The continuing prosecutions of foreign-account holders and their facilitators created a favorable atmosphere for the IRS to roll out a second voluntary disclosure program on February 8, 2011. Also, buoyed by our success in the United States, a number of European countries have pressed Switzerland to provide similar account information for their nationals.

By strategically timing its voluntary disclosure programs in tandem with the Tax Division's civil and criminal litigation efforts, the IRS has been able to obtain significant additional information about those who have helped to facilitate tax fraud -- information that is extremely important to tax administration and is expected to lead to additional criminal investigations. Although hard to measure, the fact that foreign bank secrecy is no longer "secret" should improve voluntary compliance by dissuading many other taxpayers from attempting to maintain hidden offshore accounts in the first instance. Put simply, the word is out that placing assets in foreign accounts no longer provides the protection from disclosure it once did.

Offshore Compliance Initiative News
Indictments, Pleas, Sentencings, and
Other Developments

July 30, 2012
California UBS Clients Sentenced to Prison for Hiding Assets in Secret Bank Accounts Around the World

June 15, 2012
Three Tax Return Preparers Charged with Helping Clients Evade Taxes by Hiding Millions in Secret Accounts at Two Israeli Banks

May 30, 2012
South Florida Retired Businessman Pleads Guilty to Failing to Disclose Assets Held in Swiss Banks

February 2, 2012
Swiss Bank Indicted on U.S. Tax Charges

January 30, 2012
UBS Clients and Tax Attorney Indicted in Phoenix for Hiding Assets in Secret Foreign Bank Accounts

January 3, 2012
Manhattan U.S. Attorney Charges Three Swiss Bankers with Conspiring to Hide More Than $1.2 Billion in U.S. Taxpayer Accounts from the IRS

December 7, 2011
Client of UBS and Swiss Cantonal Bank Indicted for Conspiracy to Defraud the IRS

November 17, 2011
HSBC India Client Indicted for Tax Evasion and Failing to Report Foreign Bank Accounts

August 3, 2011
UBS Client Pleads Guilty to Filing False Tax Return

August 2, 2011
Former UBS Banker Charged with Helping U.S. Taxpayers Use Secret Swiss Bank Accounts to Evade U.S. Taxes

July 21, 2011
Swiss International Bank's Former Head of North America Offshore Banking, Others Charged with Conspiracy