US issues warning against offshore bank account holders

US issues warning against offshore bank account holders

Use of secret offshore accounts to evade US taxes costs Treasury at least $100 billion annually.

US has issued stern warning to those having offshore bank accounts and evading paying their taxes in the country.

Encouraged by the success of its actions against those holding bank accounts in Switzerland and India to evade taxes,a senior Justice Department official had yesterday said that time is fast running out for such people as the US is expanding its operations against tax evaders.

“If there’s one message I want to get out there on the offshore bank accounts issue,it is that time is running out,and anyone who is still waiting should come forward,Kathryn Keneally,Assistant Attorney General for the Tax Division at the Department of Justice said.

She further said that “if anyone is waiting for there to be a news announcement that makes them think,oh,they’re finally on to my country and now I should report,by that time it may be too late”.


Responding to questions,Keneally said unlike in the past,the US has a lot of resources available now,both the Tax Division and the Internal Revenue Service (IRS).

“One observation I’ve made before is I think that people who are out there look at what happened in 2009 and expect something like an announcement about a deferred prosecution agreement or a high- profile prosecution,” she said.

“What is happening now is that we are getting information from many different kinds of sources. We are getting information through the voluntary disclosure programme,” the Treasury official said.

She added that over 38,000 people came forward and described what they did with their offshore bank accounts,and there is a wealth of information in those disclosures.

“Both we and the IRS are using that information to expand outwards. We have whistle-blower activity. We have information that we’re getting through the course of our investigations and cooperation that we’re getting. Information is coming from

a variety of sources,and it really is extensive at this point,” the official said.

According to a 2008 Senate report,the use of secret offshore accounts to evade US taxes costs the Treasury at least USD 100 billion annually.

The Justice Department’s current offshore programme began in 2008,with the investigation of UBS,which resulted in the 2009 UBS deferred prosecution agreement.

Since 2008,it has charged a total of 30 banking professionals and 62 account holders,which have so far resulted in three convictions after trial and 55 guilty pleas,

including 16 guilty pleas this year alone.

In January,2013,the US Attorney’s Office in the Southern District of New York secured the guilty plea of Wegelin Bank,the oldest private bank in Switzerland,and the first foreign bank to plead guilty to felony tax charges.

Appearing on behalf of the bank,managing partner Otto Bruderer admitted that the bank had conspired to defraud the United States by helping US account holders hide assets from the IRS in undeclared accounts.

In the same month,the federal district court in New York entered an order authorising the IRS to issue a “John Doe” summons seeking records of Wegelin’s US correspondent account at UBS,which will allow the US to determine the identity of

US taxpayers who may hold accounts at Wegelin and other banks based in Switzerland to evade federal income taxes.

In the past year,the Division has charged 8 banking professionals and 11 account holders in connection with investigations into offshore banks located in India,Israel,

and Switzerland.

In August 2012,Indian American Arvind Ahuja,a Wisconsin neurosurgeon who maintained an undeclared account at HSBC India,was convicted following a jury trial of filing a false 2009 income tax return and failing to file an FBAR.

“If people are using countries as tax havens,we are looking at those accounts. The core message here is that if there are people still out there — to the extent that there

are people still out there with unreported offshore bank accounts,they should stop waiting and come forward,” Keneally said.


So far the Department of Justice has targeted offshore accounts in Switzerland,Israel and India.