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International Law

US Tax-Evasion Probe Is Eyeing Americans with Offshore Accounts Tied to Israel Banks

Posted Sep 16, 2011 11:57 AM CDT
By Martha Neil

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An ongoing Internal Revenue Service probe of Americans who have evaded income tax by keeping assets in offshore bank accounts is now looking at a number of financial institutions in Israel.

It appears that some individuals shifted funds to Swiss branches of Israel banks when Switzerland's largest bank, UBS AG, previously was targeted for federal enforcement, Reuters reports.

In a Feb. 2009 settlement with the U.S. Department of Justice, UBS admitted to criminal conduct, paid a fine of $780 million and, eventually, provided information about account-holders with balances of more than $1 million between 2001 and 2008. Officials at UBS reportedly got the bank into trouble by helping Americans hide assets. Meanwhile, a number of individual account-holders were prosecuted by the feds or disclosed assets and paid lesser penalties under amnesty programs, as detailed in earlier ABAJournal.com posts.

In an Aug. 31 letter to 10 foreign banks, the DOJ's second-highest law enforcement official asked three Israeli banks and seven Swiss institutions to provide statistical data about American account-holders by Sept. 23. That indicates a shift in the probe's focus outside Switzerland, Reuters says.

Tax attorney Datan Dorot of Miami told the news agency that some clients of his who have Israel bank accounts were called by bankers there about six weeks ago. They were advised, he said, to close their accounts at Swiss branches of the bank to avoid DOJ scrutiny.

But by closing their accounts and, presumably, opening new ones elsewhere, individuals aren't resolving the basic issue—the need to disclose assets to the IRS and pay taxes. Hence, "the Israeli banks are suggesting a very bad idea," said Dorot.

Earlier coverage:

ABAJournal.com: "US Tax Probe ‘May Spread Like Wildfire’ After UBS Settlement"

ABAJournal.com: "4 Foreign Bankers Indicted in US, Accused of Conspiracy to Help Americans Hide Assets, Evade Taxes"

ABAJournal.com: "Lawyer Disbarred for Verbal Aggression to Pay $9.8M Fine for Hiding Cash Overseas"

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