mykeystrokes.com

The Cheaters and Their Banks: Taking The Battle To The Banks

The Obama administration is rightly keeping the pressure on tax cheats and the bank executives who help them by stashing their money in secret accounts overseas. Now we would like to see the Internal Revenue Service and the Justice Department take the battle to the banks themselves. That’s the only way of getting them to drop this lucrative and illegal business.

The Justice Department has charged five bankers with helping wealthy Americans conceal their assets from American authorities. A former employee of Switzerland’s UBS who now works for rival Credit Suisse was arrested in January and accused of helping 100 to 150 Americans hide as much as $500 million from tax authorities.

A few weeks later, three former employees and one current banker at Credit Suisse were indicted for helping 17 Americans conceal assets in accounts at the bank and then helping them move the stash to other banks in Switzerland, Hong Kong and Israel once it was clear American authorities were on the trail of tax evaders at big Swiss banks.

This is a promising route both to recover unpaid taxes and to deter other Americans from trying to evade the I.R.S. this way. So far, however, the banks have faced no charges. The country-hopping by the Credit Suisse account holders in search of a safer hiding place suggests that cross-border tax evasion won’t be shut down until the institutions determine that secret offshore accounts are too risky a business.

The I.R.S.’s strategy gathered momentum when the agency went after UBS, which was caught sending bankers to the United States to offer tax evasion services and settled with the government. The bank paid a $780 million fine and exited the business. It promised to cooperate with the government and later revealed the names of some 5,000 American secret account holders. The case eventually led Switzerland to relax its bank secrecy laws and cooperate with American authorities.

Since then, some 20,000 Americans have disclosed their accounts to the I.R.S., taking advantage of programs that shielded them from prosecution in exchange for paying back taxes, interest and a substantial fine. UBS has since gotten out of the American cross-border banking business, as have Credit Suisse and other big Swiss banks. But there are still banks willing to open secret offshore accounts for wealthy Americans. It will take some more high-profile action against financial institutions to force them out of the racket.

By: The New York Times-Editorial, Opinion Page, March 13, 2011

March 15, 2011 - Posted by raemd95 | Banks, IRS, Justice Department, Offshore Accounts, Tax Evasion | Credit Suisse, Financial Institutions, Taxes, UBS