IRS Broadens Search for Offshore Tax Evasion

From more than 80 Swiss banks,[1] to the individuals who used those banks to evade taxes,[2] to financial firms in the Cayman Islands,[3] the IRS has been busy hunting down offshore tax evasion, and has been very successful at it. Bolstered by this success, the IRS is now broadening its search to rectify tax evasion worldwide. So, who, or where, is the lucky winner of the IRS’ newfound attention? Quite possibly, Singapore. Just last month, the IRS asked a Miami federal judge to order UBS Group AG—one of the largest Swiss banks, that also was forced to pay a 780 million dollar settlement as a result of the Switzerland crackdown—to produce its records on an account in Singapore held by Ching-Ye Hsiaw, an American taxpayer that banks with UBS.[4] The government’s position is that it has a reasonable interest in determining how much Hsiaw owes in taxes, while UBS contends that it is against Singapore’s bank secrecy laws to produce the documents without Hsiaw’s consent.[5] The federal judge has scheduled UBS to appear on March 31 to explain why it will not produce the requested records.[6]

From this, it seems the IRS’ offshore tax evasion crackdown in Switzerland was just the tip of the iceberg. Indeed, a former federal prosecutor that worked on the government’s case against UBS in 2009, Jeff Neiman, said, “UBS can be held in contempt if they don’t produce the records [because UBS subjected itself to U.S. jurisdiction]. I think it’s the IRS’s way to start getting at Singapore.”[7]

As this battle between U.S. tax policy and Singapore’s bank secrecy laws begins to unfold, odds are not looking good for Singapore.

–By Tony Nasser, Esq., Barnes Law

 Tony Nasser is associated with Barnes Law, licensed to practice law in California.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] https://www.justice.gov/opa/pr/justice-department-announces-final-swiss-bank-program-category-2-resolution-hszh-verwaltungs

[2] http://www.barneslawllp.com/nowhere-to-run-nowhere-to-hide-the-irs-prosecutes-expatriate-who-renounced-his-us-citizenship-years-ago-for-nearly-decade-old-tax-crime/

[3] http://www.barneslawllp.com/from-switzerland-to-the-cayman-islands-the-irs-continues-the-hunt/

[4] http://www.bloomberg.com/news/articles/2016-03-03/singapore-banking-secrecy-makes-ripe-target-for-irs

[5] http://www.law360.com/articles/763378/feds-want-ubs-forced-to-give-up-taxpayer-s-bank-records

[6] http://www.bloomberg.com/news/articles/2016-03-03/singapore-banking-secrecy-makes-ripe-target-for-irs

[7] Ibid.