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IRS to probe Caribbean offshore accounts

Sunday, November 17, 2013

A United States district court has authorised the Internal Revenue Service (IRS) to issue summons for US taxpayers records held in offshore bank accounts in the Caribbean. 



The US Justice Department said the order by US District Judge Richard M Berman of the Southern District of New York requires five banks—Mellon, Citibank, JPMorgan Chase Bank NA, HSBC Bank USA NA, and Bank of America NA—to “produce information about US taxpayers who may be evading or have evaded US federal taxes by holding interests in undisclosed accounts.”


The Justice Department said these accounts are held at The Bank of NT Butterfield & Son Lt and its affiliates in the Bahamas, Barbados, The Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom. 



“In these actions, the court grant the IRS permission to serve what are known as ‘John Doe’ summons on Mellon, Citibank, JPMorgan, HSBC, and Bank of America,” the statement said, noting that these summons would be used to obtain information about possible tax fraud by individuals whose identities are unknown. “These cases once again demonstrate the department’s resolve to uncover and identify taxpayers who tried to hide money overseas as a way to avoid federal taxes,” said Assistant Attorney General Kathryn Keneally.


“These ‘John Doe’ summons will provide information about individuals using financial institutions from Switzerland to the Cayman Islands to Hong Kong to avoid their US tax obligations,” she said. “US taxpayers still holding accounts who have not come clean should come forward and do the right thing before it’s too late,” she added.


US Attorney for the Southern District of New York Preet Bharara said the latest action “shows that the use of foreign banks for tax evasion remains a high investigative priority of this office,” adding that US citizens “should understand that loud and clear.” Acting IRS Commissioner Danny Werfel said international issues remain a major focus for the IRS, and that his agency was continuing efforts to fight tax evaders who use offshore accounts to skirt the law.


“These John Doe summonses for correspondent account records show our determination to pursue evaders using offshore accounts, even if the person hiding money overseas chooses a bank that has no offices on US soil,” Werfel said. The Justice Department said the IRS Offshore Voluntary Disclosure programme and initiatives enable US taxpayers to resolve their tax liabilities and minimise their chances of criminal prosecution by voluntarily disclosing foreign accounts and income.


It said federal tax law requires US taxpayers to pay taxes on all income earned worldwide. “Willful failure to report a foreign account can result in a fine of up to 50 per cent of the amount in the account at the time of the violation,” the department warned.





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