EU-US Agree to Share Citizens Bank Data

Just a few weeks after a deal was finalized with the Swiss to provide information about clients from UBS, President Obama is taking the next step in his commitment to crack down on offshore tax evasion. On Thursday he announced a deal between the United States and the European Union to share banking data.

"The threat of terrorism faced by the United States and the European Union continues and, with this agreement, all of our citizens will be safer," Obama said in a statement released by the White House.

"This new, legally binding agreement reflects significant additional data privacy safeguards but still retains the effectiveness and integrity of this indispensable counter-terrorism program," he said.

European MPs earlier Thursday voted 484-109 for a new five-year deal to allow the United States to again have access to banking information from August 1.

The Terrorist Finance Tracking Programme had allowed US access to information from the interbank money transfer system SWIFT, which is based in Brussels, but EU lawmakers' main concern was how personal information would be used by US authorities.

UBS Customers: You May Want To Call The IRS Right Now

Customers of UBS that have not come clean about their association with the troubled financial giant should speak up before it’s too late. After a lengthy debate, the Swiss Parliament and UBS have agreed to finally release the names of 4,450 clients.

According to the Business Insider, if you've still got a secret Swiss bank account with UBS that you haven't told IRS authorities about, now may be the time. You may have mere hours to do so, before the Swiss do it for you, according to Bloomberg.

The Swiss Parliament recently passed a law forcing UBS to reveal the names of 4,450 clients.

One New York law firm, Rubinstein & Rubinstein LLP, said they've been getting, "panicked calls all week."

So, if you happen to be, or think you might be one of the 4,450, it might be time to make some phone calls.

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.

Ex-UBS Banker Seeks Billions for Blowing Whistle

Last Friday Lynnley Browning of NYTimes.com posted an article on Bradley C. Birkenfeld, and his chances of a billion dollar payout from the IRS. For those of you who might not be familiar, Birkenfeld was a private banker at the Swiss bank UBS. He divulged the tax evasion secrets of the bank and, as part of a Federal deal, admitted to helping hundreds of taxpayers.

Bradley C. Birkenfeld was sentenced to 40 months in prison for helping rich Americans dodge their taxes. Now, as thousands of wealthy Americans seek amnesty for keeping illicit, offshore bank accounts, Mr. Birkenfeld and his lawyers hope to use a new federal whistle-blower law to claim a multibillion-dollar reward from the American government. If they succeed — and legal experts say the odds are pretty good — it would be the largest reward of its kind.

Mr. Birkenfeld, who is to begin his prison term as soon as January, is being represented by the executive director of the National Whistleblowers Center, Stephen M. Kohn. Mr. Kohn successfully represented Linda Tripp, who helped expose the Monica Lewinsky scandal of the Clinton years. “We are seeking at least several billion dollars,” Mr. Kohn said.

It might seem outlandish that Mr. Birkenfeld, who pleaded guilty in June 2008 to conspiring to defraud the United States government, would seek any reward at all. But experts in whistle-blower cases — who, admittedly, have an interest in fostering such claims — say he has a persuasive case.

“I do think he has a serious claim,” said Erika A. Kelton, a partner at Phillips & Cohen, a law firm that specializes in large whistle-blower claims. “It was very credible, very useful information from inside UBS that he provided. The law is pretty clean on this.”

Over 14,700 Americans Admit Foreign Bank Accounts to IRS

From ABCNews.com:

Under an IRS voluntary disclosure program that allows U.S. taxpayers to come clean about secret foreign bank accounts and avoid possible prosecution, over 14,700 Americans have now admitted to hiding assets overseas, the IRS and the Justice Department announced today.

The number nearly doubles the more than 7,500 Americans who reported such accounts to the IRS before the Oct. 15 deadline, following a settlement with Swiss banking giant UBS.

"The message to American taxpayers is clear: the era of bank secrecy and hidden assets is over," U.S. Deputy Attorney General David W. Ogden said in a statement.

The once-secretive Swiss bank sent letters to thousands of its American customers in early October, informing them "your account with UBS appears to be within the scope of the IRS Treaty Request" and that under a new agreement between the U.S. and Switzerland, UBS would provide names and account information to U.S. authorities.

In August, the two countries signed a historic agreement to obtain information from UBS to identify information on up to 4,450 accounts. U.S. officials believe the accounts could hold up to $18 billion, and they applauded the move as a major step in lifting the shroud of Swiss banking secrecy and uncovering potentially billions of dollars stored in accounts there by wealthy U.S. account holders who could be dodging U.S. taxes.

"We'll be receiving an unprecedented amount of information on taxpayers who have evaded their tax obligation by hiding money offshore at UBS," IRS Commissioner Dan Shulman said after the agreement was signed.

While significant, the list of 4,450 names was considerably less than the IRS and Justice Department initially sought.

USA Tops International Tax Haven List, Thanks To Delaware

Although the Federal government is going to great lengths to take action against taxpayers using Swiss bank accounts to avoid paying taxes, according to the U.K. based Tax Justice Network, Delaware is the biggest tax haven on the planet. Their report claims the state is "the most secretive financial jurisdiction in the world," based off an analysis “60 financial jurisdictions according to level of secrecy and cooperation with foreign tax authorities.”

Delaware even beat out Luxembourg, Switzerland, and the Cayman Islands who came in 2^nd, 3^rd, and 4^th place respectively. Check out the following facts about Delaware from the Tax Justice Network’s press release, thanks to Huffington Post.

• According to the Delaware Secretary of State's office, their operating budget was $12 million in 2007 and they made $24 million in the fees for expedited incorporation filings alone.
• There are currently some 695,000 active entities registered in Delaware, including 50 percent of the corporations publically traded on the U.S. stock exchange.
• New business formations in Delaware are currently running at about 130,000 per annum.
• The growth of private individual deposits by non-residents was most robust in the United States outranking other popular financial jurisdictions such as the Cayman Islands, United Kingdom, and Luxembourg with total non-resident deposits equalling $2.6 trillion in 2007.

1st UBS Client Charged By US Gets Probation In Tax Case

The results are in for the first U.S citizen to be tried in a UBS offshore banking case. Steven Rubinstein – an accountant from Florida – was ordered to pay a $40,000 criminal fine and sentenced to 3 years of probation after pleading guilty in court.

The sentence was lighter than the recommendation of prosecutors, who sought a one-year prison term for Rubinstein. He faced a possible sentence of 18 to 24 months under advisory sentencing guidelines.

Rubinstein was sentenced in a Florida federal court for filing a false tax return. Prosecutors charged him in April and he pleaded guilty in June.

Prosecutors said Rubinstein communicated with UBS bankers from 2001 to 2008 about the purchase and sale of securities worth more than 4.5 million Swiss Francs. They also said Rubinstein repatriated roughly $7 million into the U.S. to buy property and build a home in Boca Raton, Fla.

Continue reading at WSJ.com…

UBS Registered Mail Warns U.S. Clients

From Reuters.com:

Swiss bank UBS AG warned U.S. customers by registered mail their account details may be given to U.S. tax authorities, a method that could itself breach secrecy laws, a Swiss paper said on Sunday.

The use of registered mail and envelopes showing the sender was UBS could enable the U.S. authorities to trace customers wanted for tax evasion well before their details are handed over under a U.S.-Swiss double taxation agreement, Sonntag weekly paper said.

A spokesman for UBS declined to comment on the report.

Switzerland and the United States settled a row over evasion of U.S. taxes in August when Switzerland agreed to hand over details of 4,450 U.S. accounts at UBS.

But it could take into early 2010 before the first names are handed over under the agreed legal procedures.

Some 7,500 Americans voluntarily disclosed information about hidden overseas assets under a tax amnesty program that expired on October 15, according to the top U.S. tax collector.

IRS Extends Amnesty Program for Tax Cheats

A few weeks ago, I posted a blog entry about the IRS amnesty program and the deadline for offshore tax evaders to turn themselves in. However, with the Wednesday deadline approaching, the Federal government has announced a 3-week extension. Check out the following article about the announcement courtesy of the Associated Press.

Procrastinating tax cheats will get a few extra weeks to apply for an amnesty program that has been flooded with applications from people who hid assets overseas.

The Internal Revenue Service said Monday it will extend the deadline, originally set for Wednesday, until Oct. 15.

More than 3,000 Americans have applied for the program, which promises no jail time and reduced penalties for tax dodgers who come forward, said a government official who spoke on condition of anonymity because the agency has not publicly released the size of the program.

The IRS is extending the deadline to give a rush of applicants more time to prepare their paperwork. The agency said there will be no additional extensions.

Tax advisers said the program, combined with a high-profile case against Swiss banking giant UBS AG, has generated a lot of calls from nervous tax dodgers.

"They're sitting in disbelief that this is going on," said Richard Boggs, chief executive of Nationwide Tax Relief, a Los-Angeles-based tax firm that specializes in clients with tax debts exceeding $100,000. "I ask people to ask of themselves, 'What is their peace of mind worth? What is a fresh start worth? What is a clear conscience worth?'"

The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.

IRS Corporate Audit Division Will Examine UBS Tax Evasion Cases

When the average taxpayer gets audited by the IRS, they usually get contacted by a regular IRS revenue office. However, this is not the case for those who are being audited as a result of the recent UBS settlement. According to Bloomberg.com, the IRS has created a new division for auditing wealthy Americans suspected of evading taxes offshore as part of an effort to get every dollar they are owed.

The tax agency posted internal job listings yesterday seeking auditors to work for a newly created office within its Large and Mid-Size Business division that will be tasked with monitoring what it called the “global high-wealth industry.”

The move centralizes responsibility for auditing wealthy individuals suspected of offshore tax evasion in a unit with the most experience navigating international tax treaties and untangling complex cross-border business structures.

“That’s where the most sophistication is at IRS,” said Michael Murphy, a former deputy IRS commissioner who is now a consultant for the law firm Sutherland Asbill & Brennan LLP in Washington.

Responsibility for auditing wealthy individuals is currently split among IRS divisions devoted to small businesses and self-employed wage earners and investors, which don’t have as much experience in cross-border transactions, Murphy said.

The IRS says it anticipates handling up to 10,000 new cases related to UBS, including thousands of people who come forward voluntarily in exchange for reduced penalties before Sept. 23.

Settlement Near in UBS Tax Evasion Case

According to the Associated Press the U.S. and Swiss government are close to reaching a deal over recent allegations that American taxpayers were using accounts to avoid paying taxes on the funds. The Federal government had planned to take UBS (the largest Swiss bank) to trial, but a Florida judge has canceled the trial after word broke that negotiations between the governments had been fruitful.

Justice Department attorney Stuart Gibson said Friday in a conference call with the judge that major issues have been resolved. He did not disclose details.

U.S. District Judge Alan S. Gold agreed to cancel a trial that was supposed to begin Monday.

The dispute involves about 52,000 Americans the U.S. believes are hiding billions of dollars of assets in UBS accounts. The bank and Swiss government say the names cannot be disclosed without violating long-standing Swiss bank secrecy laws.

U.S. Secretary of State Hillary Clinton and Swiss Foreign Minister Micheline Calmy-Rey are scheduled to discuss the issue Friday in Washington.

Lawyer Could Face Jail for Voir Dire Question

From ABA Journal.com:

A federal magistrate has found patent lawyer John van Loben Sels in contempt of court and threatened him with a 48-hour jail sentence for a question he asked during voir dire.

Van Loben Sels asked potential jurors in a patent infringement suit whether they had "a problem with a company that puts its headquarters offshore on a Caribbean island in order to avoid paying U.S. taxes," the Recorder reports. He is a partner with Wang, Hartmann, Gibbs & Cauley of Mountain View, Calif.

U.S. Magistrate Judge Charles Everingham IV of Marshall, Texas, had prohibited Van Loben Sels and other lawyers for Beyond Innovation Technology Co., a defendant in a patent suit, from saying anything about the tax motivation for the Cayman Islands home of the plaintiff, O2 Micro.

Everingham said Van Loben Sels would not have to serve the sentence if he behaved for the rest of the case, according to the story. But he granted a mistrial and imposed other sanctions on Beyond Innovation Technology Co., known as BiTEK. It will have to foot the bill for new jury selection, will get half the voir dire time of its opponent and will get two peremptory challenges instead of four, according to the Recorder.

Van Loben Sels had defended his question, saying it was hypothetical and he didn't refer to O2 Micro by name.

UBS in Talks to Settle Case on 52,000 Accounts

After months of negotiation it looks like UBS, the largest Swiss bank, has finally agreed with the Federal government to give up the names of over 52,000 Americans who are suspect of using their accounts to illegally avoid paying their taxes.

According to Bloomberg.com, “UBS agreed to an unprecedented breach of Swiss secrecy laws by giving the Internal Revenue Service data on more than 250 accounts. Switzerland, which supports UBS in the case, said the U.S. push for data on 52,000 other accounts is a threat to its sovereignty and would force the bank to violate Swiss criminal laws protecting bank secrecy.

“Over the last week or so, there have been high-level officials from the two governments meeting, trying to narrow the issues and bring about a resolution,” Stuart Gibson, a Justice Department senior litigation counsel, told U.S. District Judge Alan Gold today at a hearing.

UBS attorney Eugene Stearns said the bank learned on July 11 about discussions between the Swiss and U.S. governments.

“We are anxious for the governments of these two democracies to resolve these issues,” said Stearns. “It’s a minefield trying to resolve these issues.”

Lynnley Browning of the New York Times also weighed in on the latest developments noting that “the dispute between UBS and the United States has escalated into a diplomatic drama and has threatened to pierce the veil of Swiss financial secrecy. UBS and the Swiss government have said they will not disclose client names, even if ordered by a judge, because doing so would violate Swiss laws governing financial secrecy and subject UBS executives to prosecution in Switzerland.”

In February, the Internal Revenue Service, backed by the Justice Department, sued UBS, the world’s largest private bank and a pillar of the Swiss economy, to force it to disclose the names of 52,000 wealthy American clients suspected of tax evasion through UBS’s offshore private banking division.

The Justice Department also increased its pressure on UBS on Sunday, saying in a separate filing that it would consider imposing unspecified monetary sanctions on the bank if it failed to turn over the names upon a judge’s order.