4 Bankers Charged with Hiding $3 Billion in Assets from IRS

Four bankers who are part of the Zurich-based Credit Suisse Group were indicted yesterday after allegedly helping American taxpayers cheat the IRS out of $3 billion. Warrants were issued for all four (Marco Parenti Adami, Emanuel Agustoni, Michele Bergantino and Roger Schaerer), who are thought to be in Switzerland.

From Huffington Post.com:

Prosecutors allege in the indictment that the conspiracy goes back as far as 1953. The indictment alleges that as of late 2008 Credit Suisse was maintaining thousands of secret accounts for U.S. customers with as much as $3 billion in assets.

The indictment itself – obtained by federal prosecutors in Alexandria, Va. – does not specify the bank as Credit Suisse, but a law enforcement official with knowledge of the case confirmed the bank's identity to The Associated Press. The official insisted on anonymity because he was not authorized to speak publicly on the case.

Public documents unconnected to the case also identify some of the bankers as Credit Suisse employees.

Credit Suisse itself is not charged in the indictment. But the indictment states that bank officials "knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes."

The indictment claims the bankers discouraged customers from participating in a 2009 amnesty program offered by the Obama administration, in which U.S. taxpayers could avoid criminal prosecution if they came forward with information on their secret accounts and agreed to pay a penalty.

In the fall of 2008, Credit Suisse began exiting the U.S. cross-border banking business, and the bankers advised clients to transfer their accounts to other Swiss banks that did not operate internationally and were therefore not subject to anything but Swiss law.

Read more here

The Incredible Shrinking Estate Tax

As yet another sign of the country’s economic woes, this year there were just 5,500 Americans who left behind taxable estates. This equates to less than one-quarter of one percent of all U.S. deaths, which is the smallest percentage since the great depression. Why is the percent of taxable estates so low? Well TaxVox has put together an interesting article explaining the trend, as well as the as graph comparing deaths subject to tax and exemption levels, both of which are listed below.

In part, that tiny fraction reflects the current recession’s devastation of assets—the Fed estimates that the total value of household and nonprofit assets fell by about one-sixth between 2007 and the first quarter of 2009. But changes in estate tax rules over the past decade have played a much larger role than economic swings.

The Economic Growth Tax Relief and Reconciliation Act of 2001 (EGTRRA), best known as the Bush tax cuts, phases the estate tax out over a decade. The act raised the effective exemption incrementally from $675,000 in 2001 to $3.5 million in 2009 and dropped the top tax rate from 55 percent to 45 percent. The levy disappears entirely in 2010, only to return in 2011 under pre-EGTRRA law—a $1-million exemption and 55-percent top rate. The Obama administration has proposed making the 2009 parameters permanent and indexing them for inflation. Others would set a higher exemption and a lower tax rate.

So what’s happened?

For decades before 1976, only estates worth $60,000 or more owed estate tax. That threshold remained constant in nominal terms, so more and more estates had to pay the tax as economic growth and inflation boosted household wealth. In 1943, just under 1 percent of deaths led to estate tax payments; by 1976, that share had grown to 7.65 percent (see graph).

Congress doubled the effective exemption to $120,000 in 1977 and raised it gradually to $600,000 in 1987, where it stayed for ten years. As the exemption rose, the share of estates owing tax fell to just 0.9 percent in 1987 before growing again because of the fixed exemption. In 1997, when a bit more than 2 percent of estates owed tax, Congress again enacted a series of increases in the exemption that would have reached $1 million in 2006. Deaths resulting in estate tax liability stabilized until EGTRRA set off the latest inexorable drop in taxable estates.