A Senate Report just issued states that Swiss banking giant Credit Suisse helped wealthy Americans hide billions of dollars from U.S. tax collectors.
Credit Suisse chief executive Brady W. Dougan and Deputy Attorney General James M. Cole recently appeared at a Congressional subcommittee following the issuance of the 175-page report. The report was issued after the culmination of a two-year investigation and alleges that from 2001 to 2008 Switzerland’s second-largest bank helped customers disguise Swiss accounts by opening them in the name of offshore shell entities. Bankers used cloak-and-dagger tactics to conceal their misdeeds, according to the report.
Lawmakers have accused the bank of helping wealthy Americans avoid paying taxes on as much as $12 billion in assets held at the institution.
One former customer told investigators that a Credit Suisse banker once handed him bank statements hidden in a Sports Illustrated magazine during a breakfast meeting at a Mandarin Oriental hotel.
About 1,800 Credit Suisse bankers were opening and servicing Swiss accounts for wealthy Americans by 2008. Some of those bankers helped American clients structure large cash transactions to avoid U.S. reporting requirements, in violation of U.S. law. The bank also used outside parties to supply clients with credit cards that enabled them to secretly draw upon the cash in their Swiss accounts, according to the report.
The U.S. Department Of Justice has charged 73 U.S. account holders and 35 bankers and advisers with offshore tax evasion offenses since 2009. The U.S. government has acknowledged that as many as 14 Swiss financial institutions are currently under investigation, and won’t hesitate to indict if and when circumstances merit.
Switzerland’s largest bank, UBS, turned over 4,700 accounts of U.S persons in 2009. So far 238 names of Credit Suisse U.S. customers have been turned over to the U.S. through treaty requests. More names are forthcoming given the U.S. government’s use of civil summonses and a grand jury subpoenas to get information and the Swiss government’s cooperation to now facilitate this release of this information.
The situation at Credit Suisse changed in 2008 when UBS came clean about its role in aiding U.S. tax evasion, which led the bank to disclose thousands of accounts as part of a $780 million settlement with Justice. Credit Suisse embarked on a five-year process of closing the Swiss accounts of Americans who refused to disclose them to U.S. authorities. About 18,900 wealthy Americans closed the accounts rather than pay taxes, according to the subcommittee.
Investigators initiated the probe after a 2008 hearing on UBS, during which Credit Suisse bankers acknowledged having U.S. accounts that had not been disclosed to the IRS. The subcommittee collected about 100,000 documents from the bank and conducted 23 interviews with bankers, U.S. government officials and Americans who evaded taxes using hidden Credit Suisse accounts.
At the heart of the tax evasion mess is a long-running dispute between the United States and Switzerland, whose centuries-old culture of banking secrecy has made the country a sanctuary for the world’s rich. But in August 2013, the two countries struck a deal to allow some Swiss banks to pay fines to avoid or defer prosecution over tax evasion by wealthy American customers. The deal has attracted 106 Swiss banks, which have agreed to disclose some information about U.S. customers. It does not cover the 14 Swiss banks, including Credit Suisse, that are being investigated by Justice.
Justice officials said the department believes that this deal will produce significant information about Americans who had accounts or moved money around once they learned of prosecutors’ investigations.
Congress has also enacted the Foreign Account Tax Compliance Act, requiring foreign banks to disclose U.S. customer accounts every year or pay a 30% tax on their U.S. investment income.
If you have never reported your foreign investments on your U.S. Tax Returns, you should seriously consider participating in the IRS’s Offshore Voluntary Disclosure Initiative (OVDI). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.
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