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

Couple Convicted in Tax Shelter Scheme

Recently, a married couple from Oregon was convicted of running a tax shelter scheme in which they “marketed tax trusts to clients, filed lawsuits against IRS employees, and prepared a $108 million tax lien against former Treasury Secretary John Snow.”

As this article from Web CPA explains, Tony and Micaela Dutson defrauded the U.S. government of approximately $7 million.

The couple were convicted of conspiring to defraud the IRS, obstructing the IRS, causing clients to use bogus financial instruments in an attempt to pay their taxes, failing to file tax returns, and aiding and advising a client to file a false tax return. The couple used Micaela Dutson’s law office in Tigard, Ore., to promote and sell tax trusts for several years before moving to Arizona in 2003. The couple made over $1 million from the scheme and paid no income tax.

The investigation was launched after the Internal Revenue Service discovered that multiple taxpayers who had followed advice from the Dutsons were being audited for failure to file tax returns despite a prior history of filing and paying their taxes. The IRS initiated an audit of Micaela Dutson after it received notice from the State of Oregon that she had been paid out-of-state funds to provide indigent legal services but had never filed a tax return reporting that income.

Micaela Dutson resigned from the Oregon State Bar in 2002. For several years, the IRS tried unsuccessfully to stop the Dutsons from selling abusive tax shelters before eventually referring the matter to IRS Criminal Investigation. In 2006, at the request of the IRS, a federal court in Phoenix ordered the Dutsons to cease their activities. After the investigation revealed extensive fraudulent activity, the case was referred to the U.S. Attorney’s Office for prosecution.

OECD Crackdown on Tax Havens Seen Lacking Teeth

According to Reuters.com, the number of countries included on the Organization for Economic Cooperation and Development "gray list" of tax havens – who have neglected to implement international tax standards – decreased from 40 to 17 over the past 12 months. Although the OECD has hailed this report as progress in their attempt to stamp out untaxed and illicit cash flows across the world, many critics are claiming the compliance bar was set too low to make a significant impact.

The stakes are certainly high, as the signing of bilateral Tax Information Exchange Agreements (TIEA) is the centerpiece of OECD and G20 efforts to crack down on tax havens.

The amount of money in tax havens has been estimated at $11.5 trillion by the Tax Justice Network, a respected and independent advocacy group that monitors such trends.

Spurred by public outrage over bonus-earning bankers and frauds by wealthy financiers, G20 leaders launched a campaign in April 2009 to name and shame tax havens and penalize those who failed to tighten standards and transparency.

But some say the havens are getting off lightly, and that it is more or less business as usual.

Continue reading at Reuters.com…

Crying Foul, Ex-UBS Banker Starts Prison Term

From the Wall Street Journal:

Former UBS AG private banker Bradley Birkenfeld, the key informant in the landmark U.S. case against the Swiss banking giant, reported to a federal prison in Pennsylvania Friday, while his lawyers stepped up their criticism of the U.S. Justice Department for prosecuting him.

Mr. Birkenfeld, speaking by phone while traveling to the Schuylkill County Federal Correctional Institution in Minersville, Pa., said prosecutors and the courts had treated him differently from the kinds of tax cheats he revealed to the government.

"Every single UBS client is pretty much walking away free, either house arrest or probation," said Mr. Birkenfeld, who began serving a 40-month sentence for helping UBS clients evade U.S. taxes. He pleaded guilty in 2008 and was sentenced last August.

Mr. Birkenfeld has spent recent months seeking to have his sentence reduced or postponed. And he has questioned the Justice Department's decision to indict him, given his role in helping U.S. tax authorities reach two major settlements with UBS that poked unprecedented holes in Swiss bank secrecy.

IRS Wants Sinbad to Walk Plank

From the Detroit News:

Comedian/actor Sinbad's financial problems just got a whole lot worse. The Benton Harbor native, who emceed Motown Records' 50th anniversary gala last month, owes more than $8.15 million in delinquent federal taxes and the U.S. Attorney General's office wants his house sold to help satisfy the debt, according to federal court records.

On Dec. 10, an assistant U.S. attorney asked a federal judge to foreclose on several tax liens and determine the 53-year-old comedian (full name Sinbad Adkins) is the true owner of a $1.5 million home in Hidden Hills, Calif.

The home's title is held by his brother, Michael Adkins, but since 1998 the federal government says mortgage interest and property taxes either have been paid by Sinbad's company Afros & Bellbottoms Productions Inc. or by the comedian's personal checking account.

Sinbad, who rose to fame on "Star Search" in the 1980s before starring in a string of movies like "Houseguest" and TV shows, really owns the property, the government claims. One possible hiccup, however. On Dec. 11, the day after the government filed the case, Sinbad filed Chapter 7 bankruptcy in California, listing between $10 million and $50 million in liabilities and less than $50,000 in assets.

The IRS claims Sinbad filed federal income tax returns for years 1998 through 2006 but failed to pay the reported taxes.

UBS Tax Crackdown Widens to Hong Kong

Just weeks after reaching a settlement with the U.S. government, Switzerland’s largest bank UBS AG is running into even more problems. This time reports suggest that American taxpayers used illegal bank accounts and fake businesses in Hong Kong to avoid reporting their income. Check out the following story from the Wall Street Journal.

The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.

For the first time in the government's long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank's client list, plea agreements entered in the case are providing a clearer picture of UBS's sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.

Foxy Brown Owes the IRS Too

It seems like nearly every week I come across a new story about a celebrity or professional athlete who some how forgot to pay their full tax bill. Well it seems like the latest addition to the list is pop music artist Foxy Brown, who has been charged with evading taxes for over 6 years. According to Contact Music Brown owes the IRS over $640,000. Check out a clip of their story below.

Rapper Foxy Brown has been hit with a lawsuit from U.S. tax officials after running up debts of $641,558 (£427,705). The star is accused of failing to keep up with her taxes since 2003, and Internal Revenue Service (IRS) agents have taken their case to a court in New York to try to recoup the cash. IRS officials have filed tax lien documents against Brown for allegedly missing payments between 2003 and 2006, reports AllHipHop.com.

Former All-Star Pitcher Jerry Koosman Pleads Guilty to Tax Evasion

From MLB.com:

Former All-Star pitcher Jerry Koosman pleaded guilty to federal tax evasion at a Madison, Wis., hearing on Friday and could face up to a year in prison. Sentencing is set for July 21.

Koosman, who also faces $25,000 in fines, neglected to pay federal income taxes for 2002, '03 and '04, defrauding the government out of as much as $90,000, assistant U.S. attorney John Vaudreuil told The Associated Press.

According to court documents, the IRS learned in '05 that Koosman hadn't filed any returns for 2002, '03 and '04. Using his W-2 wage statements, the IRS determined Koosman earned about $754,950 over those years, including about $130,000 from his Major League Baseball pension and $25,000 in '02 alone for autographs and personal appearances. He also had a stock sale in '02 worth $551,881.

Koosman, who helped led the 1969 Mets to a World Series title, maintained that he thought federal taxes applied only to federal workers, corporate employees and District of Columbia residents, court documents said.

"I guess it's a combination of being naive and not being able to understand law as I read it or was told," Koosman told U.S. District Judge Barbara Crabb during Friday's hearing.

Koosman, 66, lives in Osceola, Wis., and retired after the 1985 season. He played in the Majors for 19 seasons, including his first 12 with the Mets, and was an All-Star in '68 and '69. He retired with a career record of 222-209 and a 3.36 ERA.

Obama Seeks to Double Tax Law Enforcement Budget

From Reuters.com:

President Barack Obama proposed on Thursday nearly doubling funds to enforce U.S. tax laws next year, with an aim of more than quadrupling funding for tax compliance to $2.1 billion within five years.

The budget plan seeks $12.1 billion for the Internal Revenue Service, responsible for collecting and enforcing individual and corporate tax laws, for fiscal 2010, which begins October 1. That amounts to a roughly 5.2 percent increase over the IRS budget for 2009, which was $11.5 billion.

The budget proposal, which must be approved by Congress, includes a $890 million request to boost tax enforcement, including in the international arena, an increase of $400 million from 2009.

Underreporting of income by individuals and businesses led to a "tax gap" of $345 billion in 2001, the most recent year available, according to the government. Of that, corporate income tax and employment tax underreporting made up about $84 billion, according to a report by the Government Accountability Office.

The Obama administration said it would use the funds to further expand its efforts to boost compliance outside the U.S., "placing greater scrutiny on cross-border transactions and tax issues."

Earlier this week, Obama unveiled a series of proposals to overhaul mainly corporate tax rules and close loopholes in an effort he said would raise $210 billion over 10 years.

Included was a proposal to tighten rules on financial institutions that hold money abroad for U.S. citizens.

The U.S. government is currently suing giant Swiss bank UBS AG to get the names of thousands of mostly wealthy U.S. clients who may be trying to evade tax laws by keeping their money overseas.

President Obama Takes Aim At Offshore Tax Dodges

From the LA Times.com:

President Obama said this morning that he plans to crack down on American companies that legally avoid U.S. tax obligations by investing money in countries with lower tax rates.

He also plans to eliminate tax deductions for companies that achieve similar breaks by sending jobs overseas, while extending the deduction for those who create domestic jobs.

The practice of "offshoring" cheats other taxpayers, the president said, and those who circumvent the system are "aided and abetted by a broken tax system" that he pledged to fix.

Speaking to reporters in the Grand Foyer of the White House, Obama said he doesn't think companies should be rewarded more for creating a job in Bangalore, India, than for creating one in Buffalo, N.Y.

"I want to see our companies remain the most competitive," the president said, while not rewarding them for moving jobs overseas.

The president's plans could yield an additional $210 billion in tax revenue over the next decade, according to the administration.

Obama's plans would:

Eliminate some tax deductions for companies that earn profits in countries with low tax rates.

Make permanent a research and experimentation tax credit, which is offered for creating domestic jobs.

End a loophole that allows corporations to avoid taxes by reporting to the U.S. government that they're paying taxes in foreign countries and then telling the foreign countries that they're paying here.

He also is asking for money to hire 800 Internal Revenue Service agents charged with improving enforcement.

The president today called on Congress to pass "common sense" measures, including one that would require overseas banks to provide information about how much U.S. corporations invest. If they won't cooperate, Obama said, the law should assume that those banks are sheltering money for investors.

During the presidential campaign, Obama spoke frequently about ending offshoring practices, often joking about a building in the Cayman Islands that supposedly houses thousands of corporations. As a candidate, Obama promised to scale back tax breaks for U.S. companies that send jobs overseas and give them instead to those who create jobs in the U.S.

IRS Says Set To Pursue "Other Banks" On Tax Evasion

From Reuters.com:

The U.S. Internal Revenue Service (IRS) is poised to pursue "other offshore banks" for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland's UBS AG (UBSN.VX) (UBS.N), an IRS official said on Monday.

"We have identified other offshore banks that are engaged in similar activities," David Reeves, an agent with the IRS' Offshore Compliance division, told a conference in Miami on offshore finance centers.

Tax Haven Questions Could Trip Up Panama Trade Pact

From the Wall Street Journal:

Questions about Panama's status as a tax haven have raised a new hurdle for U.S. approval of a free trade deal between the U.S. and the Central American nation.

The U.S.-Panama trade pact was signed in June 2007, but the deal has been stalled along with separate bilateral trade pacts with Colombia and South Korea.

The latter two trade deals are ensnared in controversial human rights and market access disputes. But the White House said earlier this year in a "trade policy agenda" document that it hoped to send the Panama deal to Congress for consideration "relatively quickly."

Democratic lawmakers and Obama administration officials now say Panama must take steps to increase transparency and information exchange with U.S. authorities on tax issues, before the free trade agreement can advance.

"I would say with respect to Panama that there are also some important issues that need to be worked through having to do with cooperation in resisting tax evasion," White House National Economic Council Director Larry Summers said at an April 18 press conference at the Summit of the Americas.

The Treasury Dept. launched talks with Panama towards a tax information exchange agreement in 2002, but the talks have made little progress.

U.S. business lobbyists who back the U.S.-Panama trade deal have been pushing for a vote prior to Congress' August recess. But the demands from the Obama administration on tax transparency seem to make that timetable unlikely.

Panama holds presidential and parliamentary elections May 3, and it is doubtful whether the Treasury Dept. would be able to conclude a tax information exchange agreement with the lame-duck administration of outgoing President Martin Torrijos.

The Organization for Economic Cooperation and Development on April 2 listed Panama as one of 30 tax haven jurisdictions that have committed to international standards on bank secrecy, but have "not yet substantially implemented" those standards. Panama is also mentioned in legislation introduced by Sen. Carl Levin, D-Mich., with sanctions for tax haven jurisdictions.

Panamanian officials did not immediately respond to inquiries for this article. In a March letter to the OECD, Panama said that while it is not a tax haven, it is taking steps to strengthen its "legal and regulatory framework, thus helping our international financial center to not by unduly utilized by citizens of other States to evade or defraud their respective tax authorities."

Helio Castroneves Found Not Guilty In Tax-Evasion Trial

The ongoing case of Indy 500 champion Helio Castroneves has finally ended. The jurors found Mr. Castroneves not guilty of the tax evasion charges he was facing. Check out the following snippet from the MiamiHerald.com on the recent decision.

Indy 500 champ Helio Castroneves survived a potentially devastating crash Friday, acquitted of tax-evasion charges by jurors who struggled for six days to unravel complex evidence on racing-car contracts, tax law and offshore companies.

In the end, jurors found Castroneves and sister Katiucia not guilty on six counts of evading taxes on $5.5 million from race car earnings. The pair sobbed and hugged each other after hearing the decision.

The 12-member Miami federal jury deadlocked on the lead conspiracy charge against the siblings, which prompted U.S. District Judge Donald Graham to declare a mistrial on that count.

The jury also acquitted the Brazilian race car star's sports attorney, Alan R. Miller, on the main conspiracy charge and three other tax evasion counts. Miller was not charged in three other counts of the indictment.

With his legal victory, Castroneves was scheduled to fly immediately from South Florida to California to compete in the Toyota Grand Prix of Long Beach for Penske Racing, the team that hired him in late 1999. His contract with the legendary racing organization -- the big break in a career that began as a teenager go-cart racing in Brazil -- was at the core of the government's tax-evasion case.

Flanked by attorneys and an entourage of friends, Castroneves emerged from the downtown federal courthouse, his eyes swollen and red.

He showed off a rosary, proclaimed his faith and interviewed with both U.S. and Brazilian press.

''It's been a nightmare, and finally we wake up,'' said Castroneves, 33, who was sidelined from IndyCar racing during his legal ordeal. ``Instead of going to Disneyland, I want to go to Long Beach and race.''

And then he was off, jumping into a black Porsche Cayenne SUV to take him to Miami International Airport.

US, Switzerland To Begin Tax Treaty Negotiations

From The Associated Press:

The Treasury Department this month will begin revising a tax treaty with Switzerland, which has pledged to increase transparency and help crack down on tax evaders with money in Swiss banks.

The Swiss government opened the door for the talks last month after agreeing to cooperate with international tax investigations of wealthy foreigners accused of hiding billions of dollars in banks there. The move broke with a long-standing tradition of strict Swiss protections for individuals who use its banking system.

"We welcome moves by Switzerland to implement international standards by agreeing to revise the U.S.-Switzerland tax treaty," Treasury Secretary Timothy Geithner said Monday. "I look forward to swift conclusion of an agreement ... and I will continue to demand transparency from countries on behalf of American taxpayers."

The Treasury Department said negotiations between the two nations will begin April 28 in Berne, Switzerland.

The talks come as the Obama administration wants Swiss bank UBS AG to turn over information on thousands of U.S. customers who concealed their accounts from the government in violation of tax laws. UBS has formally accepted responsibility for helping Americans hide assets and agreed to pay $780 million in fines and restitution.

U.S. authorities in January charged Raoul Weil — a senior executive with UBS — with conspiring to hide $20 billion in assets from the IRS using secret overseas accounts. And a former UBS banker, Bradley Birkenfeld, pleaded guilty last year to fraud conspiracy charges in Fort Lauderdale, Fla. He has been cooperating extensively with U.S. investigators and has not yet been sentenced.

Swiss banks hold an estimated $2 trillion of foreign money, and financial services account for about 12 percent of the nation's economy. According to the Boston Consulting Group, those holdings amount to one-fourth of the world's foreign-owned assets.

The recent policy shift by the Swiss government allows it to demand bank account holders' identities in cases of suspected wrongdoing and share that information with foreign authorities.

World leaders meeting in London last week pledged to crack down on tax haven countries by imposing sanctions on the worst offenders, such as withholding financing from the International Monetary Fund or World Bank.

2 Ex-KPMG Managers Sentenced Over Tax Shelters

From The New York Times:

Two former managers at KPMG were sentenced on Wednesday after being convicted by a federal jury last December on several counts of tax evasion using illegal tax shelters.

John Larson, a former senior tax manager, was sentenced to more than 10 years and ordered to pay a fine of $6 million by Judge Lewis A. Kaplan in United States District Court in Manhattan.

Robert Pfaff, a former tax partner at KPMG, was sentenced to more than eight years and fined $3 million.

A third person convicted in the case, Raymond J. Ruble, a former partner at the law firm Sidley Austin, was sentenced to six years and six months.

Upon handing down the sentence, Judge Kaplan called the men’s behavior “extremely offensive” and said their fraudulent tax shelter scheme, which focused on clients who earned more than $20 million a year, was “a brazen act.”

“These defendants knew they were on the wrong side of the line,” he said, adding later they had cooked up “this mass-produced scheme to cheat the government out of taxes for the purposes of enriching themselves.” The losses through the scheme were estimated at more than $100 million.

Mr. Larson, 57, and Mr. Pfaff, 58, were immediately remanded into custody but might later be granted bail pending an appeal of their convictions. Mr. Ruble was granted bail pending his appeal.

After a two-month trial, Mr. Larson and Mr. Pfaff were convicted on 12 counts of tax evasion and Mr. Ruble on 10 counts of tax evasion. The jury acquitted David Greenberg, a former KPMG tax partner.

The case was called the largest criminal tax prosecution when the charges were filed in 2005, but it became much smaller after Judge Kaplan dismissed charges against 13 former KPMG executives, ruling that the government had interfered with their right to counsel.

Mr. Larson’s lawyer, Steven Bauer, said his client had been singled out by overzealous prosecutors looking for a scapegoat. “He was not trying to pull the wool over anyone’s eyes,” he said.

None of the men admitted responsibility.

At the trial, the government argued that from 1996 to 2005 the defendants put together tax shelters known as FLIP, OPIS, BLIPS and SOS that were intended to generate phony tax losses. But defense lawyers argued that their clients acted with good faith in their dealings.

KPMG was not a defendant. It agreed in 2005 to pay $456 million to settle a federal investigation.

IRS to Offer Deal to Tax Evaders

From The New York Times:

The Internal Revenue Service, under pressure to bring in money to the faltering economy, plans to give offshore tax evaders a big break.

The agency has drafted a plan that significantly lowers a penalty that applies to wealthy Americans who hide money overseas in secret accounts, a person briefed on the matter said Thursday. The plan is intended to lure out of hiding scores of wealthy people who must come forward and declare their accounts in order to take advantage of the lower penalty.

The plan was developed amid a widening investigation into wealthy American clients of UBS but will apply to clients of other banks as well.

Under the plan, according to the person briefed on the issue, the IRS will cut an onerous penalty for not filing a Report of Foreign Bank and Financial Account, known as an FBAR — something offshore tax evaders have not done.

The current penalty is 50 percent of the high balance of each account over the last three years — an amount that can wipe out an investor’s accounts in just two years — but the I.R.S. will reduce that penalty to 5 percent to 20 percent, depending in part on whether the wealth was inherited.

The I.R.S. will also require taxpayers to pay any taxes and interest owed over the last six years, as well as assess a standard, accuracy-related penalty of 20 percent. Taxpayers must also file amended returns for the last six years.

The proposal, which the IRS is communicating to its field agents who audit returns, does not allow taxpayers to escape potential prosecution, but it makes that outcome less likely, in particular for those covered under the 5 percent FBAR penalty, this person said.

“They need to get money back into the system, so they needed to sweeten the deal,” the person said.

Tax Havens Not Safe Havens

Earlier in the week the Reason.com blog posted an article on the recent tax haven controversy, and expressed how they feel tax havens are never “safe havens.” You can find a snippet of the post below, but the full story can be read here.

Things are bad all over. Writers for The Wall Street Journal have retreated to their international gold- and lead-lined bunkers, from which they are writing articles in defense of tax havens. The usual suspects Sens. Carl Levin (D-Mich.), Bryon Dorgan (D-N.D.), and Max Baucus (D-Mont.), plus Treasury officials, are trying to snag tax money from some American companies that are incorporated and operate outside the United States. As things currently stand, these companies can defer U.S. taxes on money earned overseas until it is brought into the United States.

This is the government equivalent of scrounging in the couch cushions for change...at someone else's house. But hey, they need the money, right? That part at least sort of makes sense, although it will discourage certain useful kinds of reinvestment in firms that function abroad and have other negative consequences for people who really need financial privacy in the face of corrupt and kleptocratic governments. But then there's this:

In addition to charges of tax evasion, some members of Congress—echoing European politicians including France's President Nicolas Sarkozy and British Prime Minister Gordon Brown—have even tried to scapegoat the low-tax jurisdictions as somehow being responsible for the global recession. They are demanding that the G-20 countries come up with action proposals against them at their meeting next month.

Doctor pleads guilty to hiding $3M from IRS

From The Associated Press:

The business partner of a key witness in the federal investigation of corruption under former Illinois Gov. Rod Blagojevich has pleaded guilty to hiding $3 million in income from tax collectors.

Dr. Robert Weinstein of Northbrook, Ill., admitted Tuesday in a signed plea agreement that he and political fundraiser Stuart Levine siphoned $6 million out of a charity and that he didn't report the money to the Internal Revenue Service.

Levine was the government's star witness at the trial of political fixer Tony Rezko, and he's already admitted his part in the scheme.

Rezko was convicted of shaking down businesses seeking state contracts for campaign contributions.

Weinstein faces a sentence of two years or more. U.S. District Judge Ruben Castillo set sentencing for July 1.

IRS Eyes Wider Net To Catch US Tax Cheats

The IRS is considering getting involved with other governments in order to catch US tax evaders. You can find a snippet of a Reuters article discussing the topic below, or the full text can be read here.

The U.S. Internal Revenue Service may team up with other governments to crack down on tax cheats as it faces pressure to toughen rules on Americans who try to conceal income at offshore tax havens, a senior IRS lawyer told Reuters on Tuesday.

"We are concerned about U.S. people hiding their assets and not reporting their correct worldwide income," Steven Musher, IRS associate chief counsel for international issues said in an interview on the sidelines of a banking conference.

At the same time, Musher said the IRS does not want changes to be burdensome for banks and financial institutions. "We are trying to achieve the balance between increasing the reliability and quality of documentation to serve these various competing purposes," he said.

Musher declined to discuss the agency's lawsuit seeking to obtain the names of thousands of American clients with accounts at Swiss bank UBS AG (UBSN.VX)(UBS.N).

The IRS is preparing a proposal to change rules for its so-called Qualified Intermediary Program, which helps the government keep track of U.S. funds invested in foreign banks.

Tax Trial Opens For 'Dancing With The Stars' Champ

From the Associated Press:

On top of the world a few months ago, Brazilian race car driver and "Dancing with the Stars" champ Helio Castroneves faces possible prison time if convicted at a tax evasion trial that began Monday with jury selection.

Castroneves, a two-time winner of the Indianapolis 500, smiled broadly as he entered Miami's downtown federal courthouse. Prosecutors say Castroneves, his business-manager sister Katiucia and Michigan attorney Alan R. Miller conspired to hide about $5.5 million in income from the Internal Revenue Service using offshore accounts.

Castroneves claims he relied on experts to advise him on handling finances. He also says his father controlled a Panamanian entity called Seven Promotions at the heart of the prosecution's case.

Castroneves claims the money Seven Promotions received wasn't his tax liability because the income was for his father, who had financed and promoted his son's career for over 10 years.

Castroneves, his sister and Miller also deny acting "willfully" to evade taxes and that they took improper deductions.

Under federal sentencing guidelines, Castroneves, 33, could get more than six years in prison if convicted of conspiracy and tax evasion from 1999 to 2004. That would short-circuit a brilliant racing career that began in Sao Paulo, Brazil, where a youthful Castroneves broke into the sport by driving go-carts.