Theft of Tax Data May Help U.S. Fight Tax Evasion

The next step in the IRS fight against offshore tax evasion may lead to the government’s use of stolen data.  Tax data thefts at HSBC in Switzerland and other offshore banks are leading more whistleblowers to come forward to U.S. tax authorities, Kevin Downing, a top Department of Justice prosecutor said on March 5, 2010.   The whistleblowers, including many former bank employees who worked in information technology, could help the U.S. government look for the next banks that may be helping clients evade taxes and further deter wealthy individuals from sending their money offshore.  “A lot of folks, and they seem to be IT (information technology) people, see what’s happening” in Germany and France and are coming to the U.S. with information”,  Downing said to a group of private and government lawyers at a conference in Washington.  “It’s a cottage industry right now,” he said, declining to name specific banks that could be implicated.

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


UBS agreed last year to pay $780 million and hand over 4,450 client names to settle criminal and civil charges against the bank after it admitted it actively helped U.S. clients evade U.S. tax law.  Recently, we have seen that European governments are willing to use illegally obtained data to go after tax evaders. Germany has announced that it is prepared to pay for data offered by whistleblowers on clients of Swiss banks who may have been evading taxes, even if the information has been obtained illegally.  That announcement came after France announced it had obtained sensitive data belonging to potential tax evaders, some of which belonged to the Swiss private banking operations of HSBC

Tax enforcement authorities around the world are coordinating activities on a greater basis than ever and the U.S. may be the next country to use whatever information it can get to continue its efforts against offshore tax evasion.

If you have questions about compliance with the IRS requirements on foreign assets and financial accounts, please contact us at (310) 550-6200.  Former IRS Attorneys of Holtz, Slavett & Drabkin can assist you with resolving your tax problems.

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

Copyright (c) 2010 Igor S. Drabkin.  All Rights Reserved.