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March 3, 2017


Tax Division Expands Inquiry Of Offshore Accounts To Israel Banks

The Justice Department’s Tax Division has continued its aggressive mission to obtain bank record information on U.S. citizen’s offshore accounts. As they describe it, the “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.”

On August 30, 2011, the Justice Department requested statistical data from 11 foreign banks regarding their U.S. accounts. While no prosecutions had been announced at that time, they indicated they could initiate civil enforcement actions or criminal charges.

A Bloomberg news story notes the banks may be able to avoid prosecution by paying fines, admitting wrongdoing and disclosing the data requested.

Israeli Banks Part of Inquiry

The information requested from 11 banks included three Israeli banks; Bank Leumi le-Israel BM, Bank Hapoalim and Mizrahi-Tefahot.

In a Reuters article, a spokesman for Bank Leumi was quoted as stating the “request was for general statistical data.”

The information requests were similar to those made as part of the UBS investigation that resulted in a $780 million settlement in 2009. UBS admitted criminal wrongdoing and provided information on accounts of more than $1 million for facilitating tax evasion for U.S. clients.

The investigation is part of the IRS’s strategy of using voluntary disclosure programs with the criminal and civil enforcement by the Tax Division to obtain the maximum amount of information on offshore accounts.

The statistical data was requested from a total of 11 banks, the three Israeli banks, “HSBC Holdings Plc (HSBA), the biggest European bank, Basler Kantonalbank, Wegelin & Co., Zuercher Kantonalbank, [] Julius Baer Group Ltd. (BAER)[,…]Liechtensteinische Landesbank AG and an asset manager, NZB AG,” reported Bloomberg.

The Tax Division website proudly describes the headcount of their efforts:

  • 36 client cases have been charged, 31 guilty pleas having been entered, two convicted after trial, and five awaiting trial.
  • 13 bankers and two attorneys have been charged and are awaiting trial, and one advisor and one banker being charged and convicted.
  • Over 150 prosecutions of offshore banking clients and additional investigations proceeding against banks worldwide.

The Secret is Out

The IRS and the Tax Division make it clear that they are intent on taking the secret out of secret bank accounts and will prosecute anyone involved, tax payer, banker or attorney.

If you have offshore accounts and are concerned regarding the necessary disclosure to the IRS, a tax professional experienced with international tax matters can assist, and help ensure you are not inadvertently exposed to prosecution by the IRS or the Tax Division.