11 Jan 2012

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Swiss Banks Give up U.S. Customer Names Under Government Pressure

by Timothy Wood

Clariden Leu AG, Switzerland’s oldest private bank, recently informed its American customers that it will begin turning account information over to the United States Department of Justice, providing the names of clients who may be involved in tax evasion. The decision comes in the wake of mounting pressure by the U.S. on foreign financial institutions to disclose the names of customers with suspected offshore tax issues. In 2009, for example, the U.S. settled a dispute with UBS, Switzerland’s largest bank, for $780 million and access to thousands of previously-undisclosed offshore bank accounts.

The Department of Justice’s Tax Division has identified non-compliance with U.S. tax laws as its top litigation priority. The decision followed a 2008 Senate report finding that offshore banking costs the U.S. Treasury $100 billion annually.

High-profile litigation and the roll out of a voluntary disclosure program have encouraged a record number of U.S. taxpayers to “come in from the cold.” Since 2009, nearly 18,000 taxpayers have come forward voluntarily to avoid the threat of criminal prosecution for tax evasion.

Allegations of tax evasion comprise a broad category of offenses. Tax evasion includes any attempt to willfully defeat or evade tax, the failure to file a tax return, providing false or misleading information to the IRS and the failure to pay taxes, among other things. Professionals such as accountants and attorneys who assist or counsel clients in the preparation or presentation of fraudulent returns also may face criminal charges.

The consequences of a tax evasion conviction can be significant, including both civil and criminal penalties. Tax evasion is a felony carrying up to a five-year prison sentence and $250,000 in fines for individuals and $500,000 in fines for companies. In all cases, an individual found guilty of tax evasion is required to pay all taxes owed.

The move by the U.S. to recover lost revenue is not unique. Individuals are facing greater scrutiny worldwide as countries seek to recover funds in the face of increasing national debts. If you are facing allegations of tax evasion or would like legal advice regarding your offshore bank accounts, contact an experienced tax attorney.


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