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Daily Tax Report Quotes Scott Michel: IRS Goes Beyond Switzerland in Offshore Tax Enforcement Efforts

October 28, 2016, Daily Tax Report

The IRS's Criminal Investigation Division has said that it is moving beyond Switzerland in its efforts to track down U.S. tax evaders and others who may have assisted them, the agency's investigations chief said.  Scott D. Michel, a Member of Caplin & Drysdale Chartered, noted that the government is developing leads obtained in the DOJ’s Swiss Bank Program and that there is evidence suggesting that those other countries likely include Israel and parts of Asia.  For the full article, please visit the Daily Tax Report’s website (subscription required).

Israel, Asia

“We know that there are Israeli banks that have been identified as Category 1 banks, and not all of them have resolved their cases,” said Michel, who advises U.S. citizens living abroad and foreign entities doing business in the U.S. on ways to become compliant. “So I think that is one likely jurisdiction that we may see come into play,” he told Bloomberg BNA Oct. 27. A Category 1 bank is one that is currently under investigation by the DOJ.

Michel said there has also been anecdotal evidence that the Justice Department and the IRS are conducting investigations in Asia. In February, the DOJ filed an action in federal court to compel UBS AG's branch in Miami to produce bank records of a Singapore account supposedly owned by a taxpayer living in China who is under IRS audit. In a June news release, the department announced that UBS had complied with an IRS summons for those bank records and it was voluntarily dismissing its summons enforcement action against the bank.

The principle source of information that seems to be driving these investigations is the “leaver list” data that Swiss banks supplied as part of their participation in the DOJ program, Michel said. Banks in the program were required to identify all accounts that closed since August 2008 and show all transfers in connection with those account closures, he said. That's how the DOJ and the IRS are “following the money,” he said.

“There are some very large banks who submitted a great deal of data, and out of those large—and even some smaller—banks, there's undoubtedly substantial evidence of account holders moving their assets outside Switzerland to other jurisdictions,” Michel said, “some of which may be perceived as so-called ‘tax havens’ and some of which may simply be other countries where family members reside or there are other connections to the account holder.”

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