The story of Bradley Birkenfeld, the man who blew the whistle on UBS’s tax dodging schemes to the Department of Justice in the US, is very odd.
Freshly released from prison, Birkenfeld has now been rewarded with $104m by the Internal Revenue Service for his part in a case that saw UBS pay $780m in fines to the US authorities. Read more
While in some countries avoiding tax is a national pastime, in America the government offers all manner of mechanisms to reduce one’s bill.
From deductions on mortgage payments, to the low rates on long-term capital gains that private equity moguls benefit from, to generous accelerated depreciation methods on a wide range of property. Read more
Banks and foreign governments are mounting an increasingly desperate push against a sweeping US tax law that will force overseas institutions to report their American clients to the Internal Revenue Service, the FT reports. The Foreign Account Tax Compliance Act was passed by Congress last year and comes into force in 2013. Last week, senior bank executives implored Tim Geithner, US Treasury secretary, to modify the law, according to people familiar with the meetings. The Investment Management Association has proposed a solution to help UK investors escape the “impossible” US tax rules, Investment Week says. Read more
The Bond Buyer’s Patrick Temple-West has an interesting article on Tuesday based on comments made Friday by the interim director of the IRS’s government entities bond office:
The Internal Revenue Service’s tax-exempt bond office has received referrals of around 30 whistleblower claims of potential abuses in the municipal bond market, an official said Friday. Read more
US prosecutors have expanded their investigation into offshore tax havens to include Credit Suisse and announced criminal charges against four bankers who allegedly conspired to help US citizens evade paying taxes for decades, according to court documents and a person familiar with the matter, the FT reports. A criminal indictment against the four bankers alleges that they worked at an international Swiss bank, which people familiar with the matter confirm is Credit Suisse. AP says the four bankers are accused of helping US taxpayers hide as much as $3bn in assets from the IRS. Read more
The US is launching a new tax amnesty programme for holders of undisclosed offshore accounts, describing it as the “last, best chance” for individuals to avoid criminal prosecution and come clean with US tax authorities, the FT says. Participants in the amnesty deal will no longer risk being pursued by the US for their taxes, but they will have to pay the taxes and interest they owe and a penalty worth up to 25 per cent of their highest offshore account balance between 2003 and 2010. Accountancy Age notes that The US’ first tax amnesty closed in 2009 with 15,000 disclosures. Around 3,000 other people have come forward since then seeking an arrangement with the IRS. Read more
Bank of America has agreed to pay $137m to US authorities to resolve allegations it paid kickbacks to win municipal-bond investment contracts, reports the FT. The bank’s pact resolves investigations by the Justice department, the SEC, the Internal Revenue Service and 20 state attorneys-general. The settlement on Tuesday marks the first legal action by authorities in their probe into alleged corruption in the $2,000bn-plus muni market. Authorities said their investigation was continuing. From BofA’s side, the WSJ adds, the agreement is part of the bank’s larger push to rid itself of an array of legal headaches predating the financial crisis. Read more
Back in the 1980s — when Lewis Ranieri was still fighting for the legal status of MBS — something seminal happened for the mortgage securitisation market.
The Tax Reform Act was passed by the US in 1986, creating the tax-free Real Estate Mortgage Investment Conduit (Remic). Before then mortgage securitisation had largely taken the form of Real Estate Investment Trusts (Reits), themselves created under the Real Estate Investment Trust Act of 1960. Read more
Where oh where, did the Mike Mayo vs Citigroup dispute begin?
The CLSA bank analyst hit headlines last week after Fox Business News revealed Mayo had been “frozen out” by Citi. The reason? None other than Citi’s infamous deferred tax assets (DTAs) : Read more
The Treasury is close to issuing rules to force banks worldwide to hand over up to 5m Americans’ account details in an assault on tax evasion that financial institutions say is unworkable, the FT reports. Tens of thousands of banks, fund managers, insurers and hedge funds face having to give names of US clients with at least $50,000 of assets to the IRS under the Foreign Account Tax Compliance Act, passed in March. Banks face a stiff non-compliance penalty — a 30 per cent tax on income from all their US investments. Read more
The US justice department has warned several HSBC customers they are being investigated for potential tax evasion, reports the FT, citing people familiar with the situation. The scope of the probe is unclear but at least six US-based people, all with HSBC accounts in other countries, have been told they are facing a criminal probe over money held abroad that was not reported to the Internal Revenue Service. Separately, Sky.com reports that HSBC has appointed Lazard to assess a possible a bid for South Africa’s Nedbank. Read more
The US Justice Department has initiated a criminal investigation of HSBC clients who may have failed to disclose accounts in Indian or Singapore to the IRS, Bloomberg News reports, citing people familiar with the matter. The new probes mean the US appears to be expanding its crackdown on offshore tax evasion beyond Switzerland and UBS, Bloomberg notes. Read more
The US government and UBS on Sunday stepped back from the brink of a damaging court battle – scheduled to start on Monday – over the Swiss bank’s refusal to reveal the names of thousands of its offshore customers to the US Internal Revenue Service, the FT said. The US Department of Justice, UBS and the Swiss government asked for a three-week delay to the hearing to allow time for an “alternative” resolution to US demands for the names of 52,000 US taxpayers holding offshore accounts. Read more
Not a day goes by without some sort of juicy court filing related to Sir Allen Stanford popping up on the Bloomberg.
Like this one, filed on Friday, in which the IRS asked for permission to seek unpaid back taxes from Sir Allen and his soon-to-be ex-wife Susan: Read more
