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Switzerland Begins Providing Account Information of Thousand of UBS Clients to U.S.

idrabkin — Fri, 27 Aug 2010 18:11:37 +0000

Igor S. Drabkin, J.D., Former IRS Attorney

On August 26, 2010, the Swiss government said it had reviewed approximately 4,450 UBS client accounts and that half of the data had already been handed over to the United States. Switzerland also said that it was optimistic that the U.S. would definitively withdraw legal action over tax fraud that threatened to bring down UBS, Switzerland’s largest bank. The U.S. government agreed in August 2009 to drop tax evasion charges against UBS when Switzerland agreed to coordinate the transfer account information on roughly 4,450 of American UBS clients. “Both parties are optimistic that the U.S. authorities will receive most of the agreed account information within a reasonable period of time and that the U.S. authorities will definitively withdraw the civil action (John Doe Summons) brought against UBS,” the ministry said. “The data delivery will be largely concluded by autumn 2010,” Switzerland said. The deal between UBS and U.S. was in limbo after the Swiss ourt ruled in January that UBS could not disclose account information to the United States. The uncertainty, however, was removed after Swiss parliament gave its support in June and ruled out a referendum on the issue.

With the news that UBS has begun disclosing account information to the U.S. authorities, it becomes an issue of timing for many U.S. taxpayers. The IRS has always had a policy of voluntary disclosure, which allowed taxpayers to voluntarily come forward and truthfully disclose unreported tax, and in exchange, avoid criminal prosecution. Such disclosure, however, is deemed timely only if it happens before the IRS has learned about the taxpayer and begun its own investigation of the taxpayer. Disclosure of the UBS accounts to the U.S. makes it critical for those taxpayers with undisclosed Swiss accounts to decide if they want to make a voluntary disclosure immediately.

Former IRS Tax Attorneys at Holtz Slavett & Drabkin are available to assist you with your offshore account tax issues and may be reached at (310) 550-6200.

Author: Igor S. Drabkin, J.D., Former IRS Attorney.

U.S. to Investigate Thousands More Offshore Tax Evaders

idrabkin — Mon, 10 May 2010 18:13:25 +0000

Igor S. Drabkin, J.D., Former IRS Attorney

The U.S. government expects to investigate thousands more cases of wealthy individuals dodging taxes through offshore bank accounts, in addition to the high profile and highly publicized case against UBS AG. It appears that in addition to probing the Swiss and Caribbean bank accounts, the U.S. may be looking at the Asian banks as well.

“We expect over the next couple of years, in addition to the UBS cases, to have somewhere between 4,000 and 7,000 more cases coming to us. These are from banks and governments cooperating,” said Kevin Downing, a senior tax attorney of the U.S. Department of Justice, in a lecture in Singapore. Some private banking clients are choosing to take cash from Swiss accounts and carry it by hand back to the United States, to avoid an electronic trail, only to be caught by U.S. law enforcement officers and penalized for tax evasion and illegal smuggling of money into the country, Downing said. “When they go in and close their accounts, they are picking up brand new $100 bills … that are coming in $100,000 shrink-wrapped bundles. Guess what? We can trace that money,” he said, adding such cash would be forfeited.

Downing and a U.S. Justice Department team visited Singapore in a tour of Asian cities, also including Hong Kong, Beijing and Shanghai. The tour featured meetings with financial and tax regulatory bodies and bankers discussing cross-border tax prosecutions. Downing said that since the start of the U.S. crackdown on tax evasion, money has moved from the Caribbean to Switzerland and Asia. Downing declined to say whether the Justice Department was investigating any other foreign banks. About 15,000 Americans with offshore accounts came clean under an amnesty program last year, giving them reduced penalties and a chance to avoid criminal prosecution while giving authorities a trove of information to assist their hunt. “We now have the ability to go back through with voluntary disclosures and really target the banks with witnesses and evidence that’s right in the United States,” Downing said.

California Board of Equalization NOTICE TO APPEAR Letter (BOE-420-R) — What you need to know if you received this letter

David Holtz — Mon, 10 Aug 2009 23:22:37 +0000

California State Board of Equalization BOE-420-R Letter, Notice to Appear

In 2008, the California State Board of Equalization initiated a program to increase prosecution of violations California Revenue and Tax Code section 6071 (engaging in a sales business without a valid California seller’s permit). If you received BOE-420-R Letter, Notice to Appear, then the State Board of Equalization has determined tha t you are conducting sales in California without a valid California seller’s permit. You are in the early stages of a compliance program that may ultimately result in a criminal prosecution.

The penalty for violating R&T Code Section 6071 is a fine up to $5,000 and/or a sentence of up to one year in jail for each offense. Each officer in a corporation that conducts sales in California without a valid seller’s permit may be prosecuted under this provision and may be fined up to $5,000 and/or with one year in jail for each violation.

Before prosecution for a suspended or revoked California Seller’s Permit, it is the State Board of Equalization policy to issue notices in the following order:

David C. Holtz, J.D., LL.M., Former IRS Attorney

Form more information read, California State Board of Equalization is Increasing Criminal Prosecutions. What You Need to Know If You Received a BOE-1246-B Letter, FINAL NOTICE BEFORE PROSECTION.

Author: David C. Holtz, J.D., LL.M., Former IRS Attorney

If you have any questions, please call (310) 550-6200.

Copyright © David C. Holtz 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts of text and links may be used, provided that full and clear credit is given to David C. Holtz with appropriate and specific direction to the original content at http://www.hsdtaxlaw.com/.

California State Board of Equalization is Increasing Criminal Prosecutions. What You Need to Know If You Received a BOE-1246-B Letter, FINAL NOTICE BEFORE PROSECTION

David Holtz — Thu, 06 Aug 2009 17:56:50 +0000

BOE-1246-B Final Notice Before Prosecution

On May 13, 2008, the Chief Counsel of the State Board of Equalization issued its legal opinion supporting the Board’s program to pursue criminal violations of Revenue and Tax Code Section 6071 (engaging in a sales business without a valid California seller’s permit) by using the Board Investigation Division employees rathar, than exclusively pursuing prosecution by referring violations to the District Attorney’s office. As result of this program, the California State Board of Equalization has recently increased the volume of taxpayer’s that are being pursued criminally for violations of section 6071. If you have received a BOE-1246-B Letter, FINAL NOTICE BEFORE PROSECUTION, from the California State Board of Equalization (“BOE”), then the BOE is in the process of pursuing you under this program.

It is a crime in California punishable with a fine of up to $5,000 and/or a sentence up one year in jail for engaging in a business without a valid California seller’s permit. In particular, pursuant to Revenue and Taxation Code Section 6071 and 7153:

Any person who engages in a business as a seller in the State of California without a valid California seller’s permit is guilty of a misdemeanor punishable by a fine up to $5,000 and/or sentenced up to one year in jail for each violation.
Each officer in a corporation that is violating this law may also guilty of a this crime punishable by a fine up to $5,000 and/or sentenced up to one year in jail for each violation.

Failure to have a valid seller’s permit commonly occurs after the State Board of Equalization revokes or suspends a seller’s permit on the basis that sales tax returns have not been filed and/or sales and use taxes has not been paid. However, it also occurs where a seller fails to obtain a seller’s permit.

David C. Holtz, J.D., LL.M., Former IRS Attorney

The issuance of the BOE-1246-B Letter, FINAL NOTICE BEFORE PROSECUTION, is a part of a criminal prosecution program intended to encourage compliance with the sales tax laws in the State of California. The State of California has announced that it will refer a case for criminal prosecution approximately 4 months after the account was revoked, or appoximately 9 months after the account became delinquent.

If you have received the BOE-1246-B Letter, FINAL NOTICE BEFORE PROSECUTION, then you are in the process of being referred for prosecution for violation of the sales tax laws. In order to avoid referral for prosecution, the tax law compliance dispute with the State Board of Equalization must be resolved quickly.

If you do not resolve the matter with the State Board of Equalization, then your case will be referred to the Criminal Investigation Division and a California BOE-1248-B Letter, NOTICE OF REFERRAL FOR CITATION AND PROSECUTION, will be issued.

In approximately 30 days after being referred to the Criminal Investigation Division, your case will be assigned to a criminal investigator. The investigator will verify that sufficient criminal knowledge and intent exists. The investigatory will interview you and provide you with a pamplet entitled “Criminal Prosecution for Failure to Possess a Valid California Seller’s Permit” providing you five business days to remedy non-compliance before being prosecuted.

In addition to the above penalties and jail time, you may be liable for the sales taxes, interest and other civil and/or criminal penalties.

Caution: If you have other audit risks because of non-compliance with other tax laws such as federal or state income tax or employment tax laws, then this prosecution program may expose your books and records to further scrutiny.

Caution: You have rights and privileges which may be waived if you do not take proper steps protect yourself in this proceeding, such as the 5th Amendment Protection Against Compelled Self-Incrimination. A waiver of such rights during this proceeding may be viewed as waiver for other proceedings and may have very broard negative impact.

Before prosecution for a suspended or revoked California Seller’s Permit, it is the State Board of Equalization policy to issue notices in the following order:

Before prosecution for a sales without a California Seller’s Permit, it is the State Board of Equalization policy to issue notices in the following order:

Legal Material:

California Revenue & Taxation Code Section § 6071 – Doing business without permit:

A person who engages in business as a seller in this state without a permit or permits or after a permit has been suspended or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor, punishable as provided in Section 7153.

California Revenue & Taxation Code Section § 7153 — Grade of offense; Punishment.

Any violation of this part, except as otherwise provided, is a misdemeanor. Each offense shall be punished by a fine of not less than one thousand dollars ($1,000) and not more than five thousand dollars ($5,000), or imprisonment not exceeding one year in the county jail, or both the fine and imprisonment in the discretion of the court.

Other Helpful Material:

California Seller’s Permit Application, Publication BOE-400-SPA

Author: David C. Holtz, J.D., LL.M., Former IRS Attorney

If you have any questions, please call (310) 550-6200.