IRS Readies Enforcement Against at Least One Overseas Bank

The Internal Revenue Service is planning an imminent enforcement action against one or more non- U.S. banks, a top agency official said.

“The IRS plans to move against one or more banks in the next month or so,” Steven Miller, deputy commissioner for services and enforcement, said at a conference in Washington on June 7.

In recent years, the IRS and the Justice Department have stepped up enforcement to combat offshore tax evasion. UBS AG (UBSN), Switzerland’s largest bank by assets, was charged in February 2009 with helping U.S. citizens evade taxes. The bank avoided prosecution by paying $780 million, admitting that it fostered tax evasion, and agreeing to give data to the IRS on more than 250 accounts. UBS later handed over data on an additional 4,400 accounts to resolve an IRS lawsuit.

In February, four Europe-based bankers at Credit Suisse Group AG (CS) were indicted in federal court in Alexandria, Virginia, accused of conspiring to help U.S. clients evade taxes. The bankers have not appeared in court. In 2008, the bank had “thousands” of accounts with $3 billion in assets not declared to the IRS, according to the indictment. Zurich-based Credit Suisse spokesman David Walker today declined to comment.

Action Against HSBC

The U.S. filed a civil action in April against London-based HSBC Holdings Plc (HSBA), the largest European bank by assets, seeking information about U.S. citizens who may have banked in India to hide accounts from the IRS.

HSBC spokesman Robert Sherman said in an e-mailed statement today that the company “does not condone tax evasion and fully supports the U.S. efforts to promote appropriate payment of taxes by U.S. taxpayers. While complying with the law in all the jurisdictions in which it operates, HSBC cooperates with requests from U.S. authorities.”

Since 2007, the U.S. has charged at least two dozen UBS clients with tax crimes. It also has charged four UBS bankers, three HSBC clients and four other alleged offshore enablers.

From March to October 2009, 15,000 taxpayers came forward under the IRS’s voluntary disclosure program. After October 2009, about 4,000 more came forward. To avoid prosecution, the taxpayers had to disclose their offshore accounts, bankers and advisers, as well as how they moved their money.

The IRS is currently conducting a second voluntary disclosure program that encourages taxpayers with offshore accounts to declare them and avoid criminal penalties.

IRS spokesman Dean Patterson declined to comment beyond Miller’s remarks. Miller’s comments were previously reported by the Bureau of National Affairs.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net; David Voreacos in New York at dvoreacos@bloomberg.net

To contact the editors responsible for this story: Mark Silva at msilva34@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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