Tax Fraud On A Grand Scale At The Highest Level

30 Oct

Today is momentous in the annals that record events of our time. I would much rather be talking about the World Series fifth game and how expensive the tickets are, but more significant in the events that shape the history of our United States of America is a completely unrelated story that is unfolding in Washington, D.C.

It involves tax fraud and money laundering money by Paul Manafort, once the man chosen by Donald Trump to be in charge of his campaign. He was indicted today and is accused of such crimes as laundering $18,000,000 — yes, that’s $18 million. This money which was hidden from the IRS with no income taxes being paid on it. And this gentleman is not even an EXPAT.

The New York Times reported today that there was speculation that Mr. Manafort might try to cut a deal to avoid prosecution. I guess that’s the way of the world of white-collar crime. Sad, but true. At least they will take the money away that he stole from us. Perhaps more with fines and interest. IMHO, he should be tarred and feathered, but I guess that we don’t impose such uncivilized punishments in 2017.

Israel Is The Mouse That Roared 2016

10 Sep

FATCA Delays Would Cause ‘Severe’ Damage, Israel Says

September 9, 2016 from Bloomberg News’s
By Jenny David

Sept. 8 — Failing to turn over U.S. citizens’ financial account information to the United States beginning Sept. 30 would cause “severe economic damage to Israel’s financial system,” Israel’s State Attorney’s Office said in opposing a lawsuit to stop the transfers.

The government’s Sept. 7 rebuttal to a lawsuit challenging Israel’s intergovernmental agreement (IGA) to facilitate disclosure under the U.S. Foreign Account Tax Compliance Act (FATCA) “could immediately undermine the ability of Israeli financial institutions to work with financial institutions in the United States” and cause the Israeli economy “significant financial damage.”

“Worldwide financial institutions would also hesitate to work with institutions regarded as not in compliance with FATCA,” the government added.

The issue of complying with FATCA is huge in Israel, where as much as 5 percent of the population—some 300,000 to 400,000 people—hold U.S. citizenship. It’s big for banks and other financial institutions as well, as they would face sanctions for noncompliance, including a 30 percent withholding tax on U.S.-sourced income payments.

Israel’s Supreme Court issued a temporary injunction in Republicans Overseas Israel v. Israel (H.C.J. 8886-15), against turning over financial information Aug. 31, after Israel’s Justice Ministry decided to begin transferring the data on Sept. 1, a month before the Sept. 30 start date approved by Israel’s parliamentary Finance Committee (172 ITM, 9/6/16).

A hearing is scheduled for Sept. 12, where the court is expected to allow the transfer of data under Israel’s IGA with the U.S. At the court’s suggestion, Israel’s banking and insurance associations were added to the suit Sept. 7 and are expected to submit their own rebuttals before the Sept. 12 hearing.
IGA Includes Penalties

Under the IGA, Israel’s financial institutions must provide information on all accounts that exceed $50,000 held in 2014 and 2015 by U.S. citizens, including those with dual Israeli citizenship, U.S. green card holders and Israeli residents of the United States.

The regulations also apply to Israeli legal entities in which American citizens have substantial holdings. They don’t, however, apply to institutional pension funds, training funds of salaried employees, funds held in legal escrow accounts or religious free-loan funds.

Penalties for failing to provide or incompletely providing information range from 5,000 to 50,000 shekels ($1,290-$12,900) per violation—half the originally envisioned fines as a 30 percent withholding tax on U.S.-sourced income payments.

Marc Zell, a lawyer with Zell, Aron & Co. in Jerusalem, and co-chair of the non-governmental organization affiliated with the U.S. Republican Party that filed the suit, said the government should further delay the financial information transfers.

“Saying a delay will irreparably damage Israel’s relations with the United States, especially in the run-up to the American elections, is like shouting fire in a crowded theater,” he said. “It ignores the political realities in the United States, in an election year and with a lame-duck president.”

Zell said if Republicans win, FATCA could be cancelled altogether. “And even if not, opposition to FATCA is growing globally. It’s a bad law,” he said.

Even if the suit is dismissed, he said, it drew attention “to the issue and the vigorous and growing dissent in Israel and around the world, for FATCA’s violation of privacy rights and constitutional safeguards.”

“Beyond the merits of the case, the government acted in bad faith by trying to transfer the information early. The court picked up on that and acted,” Zell told Bloomberg BNA.

To contact the reporter on this story: Jenny David in Jerusalem at
To contact the editor on this story: Rita McWilliams at
For More Information
Text of the government’s rebuttal is available, in Hebrew, at
An informal translation of the final, amended petition is available at

Israel High Court of Justice Rules Against FATCA

5 Sep

This was reported in yesterday’s and tells of the injunction against the implementation of FATCA in Israel.

Tax agreement for American bank account holders thrown into doubt

The Foreign Account Tax Compliance Act requires countries to provide the IRS with information on American bank account holders with over $50,000 in their account.
The temporary injunction the High Court of Justice imposed on a tax information agreement between the US and Israel on Wednesday could pose problems for the relationship between the allies.

Justice Hanan Meltzer decided on a temporary injunction stopping Israel’s implementation of the Foreign Account Tax Compliance Act (FATCA), an American law that requires countries to provide the American Internal Revenue Service information on American bank account holders with over $50,000 in their accounts. The injunction would prevent Israel from sharing personal financial data with the IRS.

The case, which was brought against the state by Republicans Overseas in Israel and Rinat Schreiber, contends that the agreement is too far-reaching.

Marc Zell, chairman of Republicans Overseas in Israel, blasted the law as discriminatory against expatriates.

“The sole justification for this discriminatory law was to enforce US tax legislation without any benefit to the Israeli state or public other than to avoid the punitive impact of American extraterritorial legislation,” he said.

Meltzer’s injunction called into question the legality of the law passed by the Knesset this summer, which would implement the information exchange between the two countries. FATCA, which aims to uncover tax evasion, threatens with severe sanctions those foreign banks that do not comply.

The state is concerned that an injunction might cause the US to label Israel’s banks as noncompliant, and shut them out of interacting with crucial financial counterparts.

The court will further discuss the petition on the agreement – which is set to go into effect on September 30 – on September 12.

FATCA has had many critics, especially among ex-pats who maintain American citizenship, but haven’t lived there for many years or don’t plan to live there again. Information uncovered through FATCA could expose Americans who have not been careful about filing taxes and reporting their foreign bank accounts (even though many American ex-pats are exempt from paying taxes while earning below a certain threshold, they are still required to file, and can face tough fines if they do not).

Nigel Green, CEO of the financial advisory organization the deVere Group, applauded the court’s actions as a step against FATCA, which he called “toxic, flawed, imperialistic legislation.”

Though catching tax evaders is a noble aim, he said, the approach has been untargeted.

“What it does – because of its plethora of serious unintended adverse consequences – is to brand the seven million Americans who choose to live and/or work overseas, including many of the 300,000 in Israel for example, as financial pariahs,” he said.

If the court upholds its ban, however, the Israeli government will have to find a new arrangement that satisfies American lawmakers.

High Inaccuracy Rate Seen in FATCA Filings

23 Aug

Wilmington, Mass. (August 19, 2016)

This is an article in as written by Michael Cohn and shows the confusion out there in the financial world. FATCA was complicated, but now layer after layer of bureaucratic confusion is being added, including alphabet soup consisting of AEOI, CDOT, CRS, and who knows what’s next. It’s no wonder that this article details the beginnings of this mess. I’m sure there’s more mud to be added to the waters. Here’s the article:

Less than half of filings for the Foreign Account Tax Compliance Act have been accurate, according to a new survey.

The survey, conducted by the Aberdeen Group on behalf of the software company Sovos Compliance, polled leaders at 100 different financial institutions and found that only 44 percent were accurate.

“These 100 survey respondents self-reported that only 44 percent of their filings were accurate, so that meant conversely 56 percent had some sort of error rate,” said Scott Freedman, director of product strategy at Sovos Compliance.

The survey polled leaders at 100 top financial institutions that are subject to the Automatic Exchange of Information, or AEOI, rules developed by the Organization for Economic Cooperation and Development to combat tax evasion. The OECD’s AEOI rules grew out of the U.S. government’s rules for FATCA compliance.

FATCA, which was included as part of the HIRE Act of 2010, requires foreign financial institutions to report on the assets of U.S. taxpayers to the Internal Revenue Service, or else face stiff penalties of up to 30 percent on their income from U.S. sources. The controversial law has led the U.S. Treasury Department to negotiate a series of intergovernmental agreements with other countries, under most of which their banks first report the information to their countries’ own tax authorities, which then pass along the information to the IRS.

The United Kingdom has instituted a similar tax regime known as Crown Dependencies and Overseas Territories, or CDOT, for 10 U.K. jurisdictions, while the OECD has created a system known as the Common Reporting Standard, or CRS, for automatic exchange of tax information between countries, which will grow to encompass nearly 100 countries in the next few years. That growing array of tax reporting requirements is probably leading to some of the inaccuracies that banks are finding.

“On a high level it may seem cut and dried to understand requirements and schemas, and it’s a whole other ballgame to actually implement them accurately,” said Freedman. “One is gathering all the data, and that’s the first huge area where you can introduce errors. These financial institutions have to gather data from a whole lot of different systems, and a lot of those systems are disconnected. The data may be dirty and they may overlap. Just collecting that into one place and cleansing the data is one huge area where all sorts of problems can occur.”

Another problem involves who needs to report the information and then reporting completely and accurately, Freedman noted. “That’s really where you’d be ingesting a lot of this data, validating the data to make sure it has the types of things that you need to comply with the reporting, and then over time what needs to be reported becomes really complex,” he said. “When it was just the U.S., that was one level of complexity. Now you’re going from one jurisdiction to, in a year or two, 90 or more jurisdictions, each with their own deadlines, each with their own guidance and filing requirements. Juggling all of that can be another area where you introduce inconsistencies and errors.”

The AEOI reporting obligations are supposed to expand from nine countries to more than 90 under the Common Reporting Standard by the end of 2018. The survey indicated that 64 percent of financial institutions feel they are significantly prepared for those obligations.

To deal with the compliance challenges, 19 percent of the financial institution leaders polled reported they had some sort of strategic, centralized automated solution in place. Another 30 percent planned to implement such a solution in the next 12 months.

While 64 percent of the financial institution leaders polled believe they are significantly prepared for FATCA and the impending Common Reporting Standard, less than half of current FATCA filings are actually accurate, they admitted. Even though all organizations subject to FATCA will also have to comply with CRS, only 65 percent of the financial institution leaders who responded to the survey believe CRS applied to them. In addition, 80 percent of the survey respondents understood that fines and penalties are among the consequences of compliance issues, but only 43 percent indicated such issues could result in a significant decrease in profit margins.

Penalties are currently limited to FATCA, but they can be high. Over the past two years, respondents reported they have had an average of 6 percent of their gross proceeds withheld due to noncompliance, leading to damages to reputation and lost customers. That trend is expected to increase as more countries implement mandated reporting over the next two years. Some of them have faced penalties of up to 30 percent.

“Fifty-nine percent put noncompliance penalties on the map, but equally or more important is loss of reputation and losing customers,” said Freedman. “There’s more at stake than just dollars and cents in terms of penalties. You really lose a lot of goodwill in the market. You can actually lose customers if you don’t comply, or if you’re inaccurate as well.”

He pointed out that FATCA is the only one of the three regimes for global reporting that currently has hard and fast penalties, though that could change eventually.

“They can be pretty harsh,” said Freedman. “They will actually withhold up to 30 percent of your gross proceeds. To date CRS does not have similar penalties, but that doesn’t mean it won’t going forward, and there has been talk about them implementing some sort of penalty down the road.”

Operational costs can also be high, according to the report, up as much as 20 percent. Approximately half the survey respondents plan to implement a centralized AEOI solution to connect the data from multiple systems and use up-to-date regulatory rules to facilitate all their filings and transmittals from a single system in an effort to reduce those costs.

Have you filed your FBAR for 2015 yet?

26 Jun

You have? Good. Next year you’d better do it earlier because they have changed the deadline, moving it up to the same day as 1040 filing, April 15th. For we expats living overseas, it will actually be well before the automatic extension the IRS gives us. Below is an article written by Roger Russell from the June 16, 2016 issue of Accounting Today which is published online.

He writes, “This may be the last time you see a reminder that the FBAR (Report of Foreign Bank and Financial Accounts) filing deadline of June 30 is fast approaching. That’s because, beginning in 2017, the annual FBAR filing will coincide with the April 15 income tax filing deadline.” This reminds me of the lyrics from a Tom Lerher song entitled Nicolai Ivanovitch Lobachevsky with refer to Tchaikovsky at the age of 10 not playing in the streets of St. Pertersburg like the other children………………because when he was 5, his parents moved to Minsk!!!!

Unlike the April 15 deadline for filing income tax returns, the upcoming June 30 deadline is cast in stone for filing an FBAR to report ownership interests in or signature authority over foreign financial assets, according to Barbara T. Kaplan, shareholder and co-chair of the Global Tax Practice at Greenberg Traurig LLP.

“Timely mailing is timely filing when it comes to a taxpayer’s income tax return, but that is not true of the FBAR filing,” Kaplan said. “If you mail your income tax return on April 15 and it arrives at the IRS office on April 18, you have met the filing deadline. When it comes to the FBAR, however, that filing must be received by the Treasury on or before June 30 this year—period.”
(see my comment below)

And while taxpayers can request a six-month extension to October to file their income tax returns, no such extension is allowed for the FBAR filing. “However, these taxpayers on extension are the ones most likely to forget and miss this year’s June 30 FBAR deadline,” she observed.

At the bottom of Schedule B there are questions concerning foreign financial accounts (including brokerage accounts, bank accounts, insurance with cash value and other less obvious financial accounts) that relate to these foreign assets and direct the taxpayer to report on an FBAR. “Taxpayers on an extension usually never get to Schedule B until after the June 30 FBAR deadline has passed, and thus may be unaware of the FBAR filing requirement,” she said.

By the time they learn about the FBAR, the filing deadline has passed and the FBAR penalty can be imposed. Less sophisticated tax preparers may also not be paying attention to their client’s June 30 FBAR deadline.”

Beginning in 2017, not only will the annual FBAR filing coincide with the April 15 filing deadline, extensions will be permitted.

Beyond this harmonization of due dates, FBARs continue to generate broader compliance issues and related planning concerns, according to Kenneth P. Brier, CPA, Esq., a partner at Brier & Ganz LLP. “Given the draconian penalties for noncompliance, clients and advisers need to keep their guard up,” he said.

“Tax preparers appropriately rely on their clients to tell them if they have a financial interest in, or signature or other authority over, a reportable foreign account,” he added. “But a client may be completely unaware of such an interest or authority.”

A case in point, he observed, is where a client is designated as the agent of a third party owning a foreign account. “This could, in principle, create an FBAR filing responsibility,” he said. “Although the account is not titled in the name of the agent, the agent could have authority, even if shared, to control the disposition of money, funds or other assets.”

This has important implications for durable powers of attorney, Brier indicated.

“If Aunt Louise holds a foreign account above the $10,000 threshold and has signed a DPOA naming her nephew as her agent, then the nephew, in principle, could have an FBAR filing obligation whether he knows it or not,” Brier cautioned. “Actual signature authority might depend on whether the foreign country will recognize a U.S. DPOA, but who wants to chance the answer to that question? Though it is hard to see how the IRS could be so hard-hearted as to assess a non-filing penalty on such an innocent, it makes sense to avoid that possibility altogether.”

Brier suggested that a durable power of attorney specifically exclude any power over any foreign account unless the agent has expressly accepted such power. “That should avoid the problem of an inadvertent signature authority,” he said. “It is worth reviewing any DPOA for which a client knows another party has designated him or her as agent, to make sure it contains such an exclusion. Here a CPA can play a critical role as watchdog for the client, coordinating with the client’s lawyer as needed.”

My comment to the article corrected a misleading implication about mailing the FBAR and is as follows,”According to you, Barbara T. Kaplan said, “If you mail your income tax return on April 15 and it arrives at the IRS office on April 18, you have met the filing deadline. When it comes to the FBAR, however, that filing must be received by the Treasury on or before June 30 this year—period.”

But there is NO MAILING OF THE FBAR and there hasn’t been for a couple of years. It can ONLY BE FILED electronically online. This year, if you do it on or before June 30th, your are in full compliance with the The Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury.”

Owe Back Taxes? Lose Your Passport

31 Mar

This was published by Bloomberg yesterday:

Americans filing from overseas face Byzantine rules and draconian penalties, courtesy of the IRS.

by Ben Steverman (Bloomberg)

The roughly 8 million Americans who live abroad automatically get a couple additional months each year to file their taxes. Don’t expect them to be grateful.

Filing to the Internal Revenue Service from overseas is more confusing, complicated and expensive than it is for Americans at home (and that’s saying something). Unlike almost every other country in the world, the U.S. demands its citizens pay taxes on all foreign income. They must file even if they have lived and worked abroad for decades, and even if they’re already paying hefty taxes to the countries where they reside.

Now it’s getting worse. In an effort to fight tax evasion, the IRS recently began forcing expatriates to report not just their income, but additional information on savings and investments—rules that have made it harder to open bank and brokerage accounts overseas. More ominously, the IRS and the State Department are also implementing a provision approved by Congress in December that could revoke the passports of Americans who owe too much–raising the prospect of being stranded abroad on account of poor arithmetic.

“A lot of people are very, very angry about the whole situation,” said David McKeegan, co-founder of Greenback Expat Tax Services, which specializes in U.S. international tax preparation. For Americans abroad, he said, “It’s very easy to feel like you’re a criminal [for] doing normal things.”

Here are several of the biggest problems U.S. citizens face:

Unnecessary Hassle
Lynn Milburn spends months worrying about her U.S. taxes each year, even though she never owes anything in the end. To be fair, the IRS often excludes the first $100,000 in foreign earnings, along with some housing expenses. It also lets Americans deduct some of the taxes they pay to local governments, which usually levy at higher rates than the U.S. does, especially in such places as Western Europe, where most expatriate Americans live. After that, however, it’s open season.

Milburn, 57, has lived overseas most of her adult life. Originally from Seattle, she recently moved from Australia to France. “Every time my situation changes, I’m not sure where I stand,” she said. Milburn said she is “petrified” of being fined; although she keeps her financial life very simple, filling out the forms correctly can be a challenge. For example, while the IRS asks about income from January to December, Australia’s tax year runs from July to June. Let the migraine begin.

A typical U.S. tax return for Americans living in the U.K. is 40 to 50 pages long, even though they often end up owing nothing, according to Robyn Limmer, head of tax at Frank Hirth, an accounting firm based in New York and London that specializes in cross-Atlantic tax issues.

And before you can say H&R Block, it bears noting that hiring a tax preparer who understands how to file from abroad isn’t cheap. “Many people have to pay thousands of dollars just to show they owe no money to the IRS,” said Keith Redmond, 51, an American who has lived in Paris for 16 years.

Lost in Translation
How do you say “tax-deferred retirement account” in Turkish or Thai?

Every country has its own way of taxing income, savings, investments and pensions, sometimes making it impossible to explain to the IRS what’s going on. Tax treaties can help specialists navigate some of these issues, but these agreements can be enormously complicated and maddeningly vague. Limmer said that even in the U.K.—where “at least we share a common language”—accountants can disagree with each other on how to sort things out, especially in the “particularly tricky” area of pensions.

Milburn isn’t an accountant or lawyer, but she has noticed the same thing: “I actually don’t think that the IRS or tax professionals necessarily know 100 percent what to do. I think it’s always a bit of a gray area. Because how can you convert something in another country to a U.S. equivalent?”

IRS agents stationed at U.S. embassies used to be able to help, but budget cuts forced the agency to close the last of those offices (in London, Paris, and Frankfurt) last year.

Double Taxation
Because the rules are so confusing, some say they often end up being taxed unfairly, paying the IRS and their home country on the same income. Brian Krahmer, 40, a Minnesota native who moved to Germany in 2014, must pay U.S. self-employment tax on his freelance income–even though the work, mostly software development, is for German companies. “If I’m already filing a German income tax return on the money earned, I don’t see any fairness from also having to file in the U.S.,” he said.

The rules can feel unfair, even when they don’t technically result in double taxation. For example, the IRS demands that Americans pay capital gains taxes on sales of homes in the U.K.—gains that can be greatly inflated by currency swings. The U.K. doesn’t have the same tax, but it does impose a tax on home purchases. An American in London who wants to move has the pleasure of paying both.

Treated Like a Criminal
The IRS’s fight against tax evasion has had its successes. Many hidden Swiss bank accounts are no longer so secret, for example. But provisions that catch millionaires hiding money overseas can also ensnare middle-income Americans working and living abroad. As a result, banks and investment companies, forced by the IRS to keep close track of their American clients, are becoming reluctant to take them on.

“We, as Americans overseas, cannot live normal lives,” said Redmond, originally from Washington, D.C. “We’re seriously limited in being able to save like stateside Americans.”

Most living outside the U.S. simply want to know how much they owe the IRS vs. the local tax collector. “These are not people who are hiding money,” Limmer said. Nine times out of 10, she estimated, an American living in London is paying more tax than a comparably compensated British citizen.

Passport Threat
The new passport-revocation rule, slipped into a transportation funding bill signed by President Barack Obama, raises the stakes. It allows the U.S. to revoke the passport of any American whose tax debt exceeds $50,000.

It’s not hard to see how expatriate taxpayers could get to this level, especially if they’re late in realizing they needed to file in the first place. The fines for failing to report bank accounts are high; the IRS can impose a penalty of $10,000 for each violation of the rules. “If the government enforces this in the most stringent way possible, this could be hugely horrible for people who live overseas,” McKeegan said.

Last month, members of Congress urged the State Department to “consider the unique circumstances of overseas Americans” before revoking anyone’s passport. An IRS spokesperson declined to comment on the passport rule or other specific taxpayer concerns. In October, the agency said its “offshore voluntary disclosure program,” a process for taxpayers to catch up on filing obligations, had collected more than $8 billion since 2009.

Accidental Americans
Many Americans who live abroad simply don’t know they need to file, and the IRS lacks an efficient way to notify them. “Nobody sends you a memo when you go overseas,” McKeegan said.

An unknown number of Americans don’t even realize they’re U.S. citizens. Because the U.S. grants citizenship for, among other things, being born in the States, babies delivered in the U.S. to non-American parents are sometimes brought back home in diapers and learn only decades later that they need to file to the IRS every year.

Increasingly, these “accidental Americans” are discovering their citizenship the hard way, as the IRS tightens tax evasion rules regarding banks. “’Am I going to get arrested at the airport?’” McKeegan said they often ask him. “You spend the first 10 minutes talking them off the ledge.”

London Mayor Boris Johnson, who was born in the U.S., had to pay the IRS last year for capital gains on his sale of a house in north London. “I think it’s absolutely outrageous,” he said when he learned of the debt in 2014. “Why should I? I haven’t lived in the U.S. since I was five years old.”

Johnson has previously said he would like to renounce his U.S. citizenship, and he’s not the only one. According to Treasury Department data, the number of Americans renouncing their citizenship last year jumped 25 percent, to a record 4,279. How much of this is the fault of the IRS and its get tough campaign may remain as mysterious as the tax code.


It was published in where I added the following comment:

Thank you Ben Steverman for accurately depicting the taxing situation that we dual citizen Expats are placed in by the IRS. I, like my fellow Americans living overseas, have an “foreign” bank account, incidentally, not in Switzerland, but equally under the IRS gun. The eight billion dollars collected by the IRS, was completely from Americans living in the USA and not from Expats living overseas. These were tax evaders living in Chicago, New York, Miami, and other places. They were hiding their money in foreign banks. I use my “foreign”bank, as you use your corner bank,for direct deposits from my employer, for direct payments to the electric company, and all the functions provided by anyone living in the US and banking there. Nonetheless, because the IRS says it is a FFI (foreign financial institution),I am subjected to FATCA, FBAR, and all the other inscribed laws as means of complicating my life as an American living overseas the. I was also subjected to a generalized audit and they demanded “official” translations of all my self-employment income and expenses, making my life even more miserable for that period.

Moving from Switzerland to Singapore

10 Mar

Is Singapore the Next Switzerland for U.S. Tax Crackdown? My answer is a resounding YES !!!!!!

This is from today’s

By David Voreacos

The Internal Revenue Service is seeking to force UBS Group AG to turn over records on an account in Singapore held by a U.S. citizen, potentially opening a new front against offshore tax evasion beyond Switzerland.

The IRS last month asked a federal judge in Miami to force UBS, the largest Swiss bank, to produce documents on Ching-Ye Hsiaw, who lives in China. The judge on Wednesday told UBS to show up in court on March 31 to explain why it has refused to supply the account records.

“They’re holding UBS hostage in the U.S. by saying you subjected yourself to U.S. jurisdiction, now produce these records outside the U.S.,” said Jeff Neiman, a former federal prosecutor. “It’s setting up a showdown of Singapore secrecy versus the U.S. need to enforce its tax laws.”

Singapore will lift banking confidentiality when foreign authorities ask it to do so and when the law is used to shield criminal activities, according to a person with direct knowledge of the city-state’s bank-regulation framework who asked not to be named because of an ongoing court case.

“No jurisdiction is off limits,” Acting Assistant Attorney General Caroline D. Ciraolo, who oversees the U.S. Justice Department’s Tax Division, told the Federal Bar Association in a speech Friday. She said “our investigations of both individuals and entities are well beyond Switzerland at this point.”

UBS spokesman Gregg Rosenberg declined to comment on the case. Hsiaw couldn’t be reached for comment.

Singapore Secrecy
The U.S. has focused largely on Switzerland in recent years as it has fought offshore tax evasion. More than 80 Swiss banks, including UBS and Credit Suisse Group AG, have agreed to pay a total of $5 billion or so in penalties and fines. The question is where the IRS and the Justice Department will turn next as they sift through a trove of data gathered from Swiss banks and from more than 50,000 U.S. taxpayers who disclosed their accounts to avoid prosecution.

The Hsiaw case provides some clues. IRS agents served a summons on UBS in 2013 for records of his account in Singapore from 2001 to 2011. The bank said it couldn’t produce them because Singapore’s bank secrecy laws prevent disclosure without permission from Hsiaw, which he hasn’t provided, according to a court filing.

“Even if Singapore’s bank secrecy laws, as UBS contends, precludes disclosure of the summoned bank records relating or pertaining to Hsiaw’s Singapore account(s), international comity requires that the records be disclosed,” IRS revenue agent James Oertel said in the filing.

Neiman, the former prosecutor, said that “UBS can be held in contempt if they don’t produce the records. I think it’s the IRS’s way to start getting at Singapore.”

Singapore is prepared to help in foreign criminal proceedings by sharing banking information through established channels, the person with knowledge of its bank regulations said.

Neiman was one of the prosecutors on a landmark case in 2009, filed in Miami, in which UBS avoided prosecution by paying $780 million, admitting it encouraged tax evasion, and agreeing to turn over secret account data on U.S. citizens. As part of the settlement, UBS provided information on Hsiaw’s Swiss account, along with about 4,500 others.

The case is U.S. v. UBS, 16-mc-20653, U.S. District Court, Southern District of Florida (Miami).

Another Swiss Bank Falls Into Line

23 Dec

Rothschild to Pay $45.4 mn to End U.S. Tax Probe

December 18, 2015
This was announced in today’s online.


“Edmond de Rothschild (Suisse) SA agreed to pay $45.4 million to avoid prosecution for helping U.S. clients evade taxes, admitting it aided them in moving cash and using sham offshore entities to hide money from the Internal Revenue Service. The bank will also be handing lists of their tax evading clinets

Rothschild is the 68th Swiss bank to reach an accord with the U.S. Justice Department this year, which has secured $802.3 million under a disclosure program that requires firms to say how they helped Americans cheat and where their money went.

In a non-prosecution agreement, the bank signed a statement of facts that detailed misconduct by relationship managers at Edmond de Rothschild (Suisse) and a Lugano unit that handled 950 U.S. accounts that held $2.16 billion between 2008 and 2013. In that period, Rothschild processed at least 155 cash withdrawals of $30,000 or more for 53 U.S. clients, including one that took out $2.53 million in one transaction, according to the agreement.

The relationship managers coordinated with an external asset manager who set up an offshore entity in Singapore, and they “knew or had reason to know” clients used advisers to set up structures in the British Virgin Islands, Panama and Liechtenstein, according to the pact, released Friday by the Justice Department.

Rothschild said the settlement will have no impact on its financial results. The bank links itself to seven generations of financiers who have advised royalty, governments, and railway barons for 250 years.

The bank also said in the accord that it helped clients in “covertly repatriating offshore funds” by providing credit cards, cash cards and debit cards to move money not declared to the IRS. “These services allowed U.S. clients to withdraw funds remotely or pay for goods and services without a paper trail back to their undeclared accounts in Switzerland,” according to the agreement.”

No doubt they will also reveal to the IRS the names of their clients who are possible tax evaders. Again, I contend that probably all of these tax evaders are residents of the USA and NOT EXPATS living abroad. Nevertheless, American citizens abroad will continue to come increasingly under scrutiny as possible tax cheats. FATCA marches forward.