New York State Bar Letter to Treasury to Restore OVDP Integrity by Not Ejecting Precleared Taxpayers (5/21/13)

The Personal Income Taxation Committee of the New York City Bar Association, here, has sent the IRS a letter, here, asking that the IRS reconsider disqualification of taxpayers previously accepted into OVDP.

Key excerpts are:

Based on public reports, it appears that the total number of taxpayers directly affected by the disqualification seems to be relatively few -- about 50 or so who held unreported accounts at Bank Leumi in Israel. However, the incident has received attention in the mainstream media and among practitioners. The implications for the IRS are much broader than those taxpayers directly affected and are likely to have a much greater impact on the OVDP which has been an overwhelming success. 

* * * * 

The IRS's disqualification of taxpayers who were previously accepted into the OVDP and in some cases had provided detailed information to the IRS in reliance on their "pre-clearance" to participate in the program, will inevitably affect the ongoing success of the OVDP as a whole. Thus, by reversing its pre-clearance and preliminary acceptance of these taxpayers, the IRS has undermined the ability of practitioners to advise their clients with certainty as to how the program works. In fact, the Model Rules of Professional Responsibility governing the conduct of attorneys requires attorneys to "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." See Rule 1.4 Client-Lawyer Relationship-Communication. Attorneys will now have to advise their clients and prospective clients that they may be disqualified from participating in the OVDP even after they were admitted into the program and disclosed detailed information about their foreign bank account(s). This information will lead some (if not many) clients to hesitate (or decline) to come forward with additional disclosures. Moreover, the IRS's failure to abide by the "rules of the road" in connection with the OVDP may affect the willingness of taxpayers to make voluntary disclosures relating to non-compliance outside the offshore account area.

Second Denial of Petition for Certiorari in Foreign Bank Account Required Records Case (5/18/13)

On May 13, 2013, the Supreme Court  denied certiorari in In re Special February 2011-1 Grand Jury Subpoena dated September 12, 2011, T.W. v. United States, 691 F.3d 903 (7th Cir. 2012).  See Supreme Court Docket Entries, here.  The context was a grand jury subpoena for the records that the Bank Secrecy Act "requires" the owner of an offshore account to maintain.  There has been an earlier denial of certiorari in In re M.H., 648 F.3d 1067, 1079 (9th Cir. 2011), cert. den. ___ U.S. ___ (2012), but taxpayers' and practitioners' hopes were up on this second petition because of the quality of the presentation in Paul Clement's petition and reply brief in chronicling the shifting Fifth Amendment jurisprudence after the required records doctrine was established and, I think, forcefully arguing that Supreme Court guidance is necessary.  See Petition for Certiorari and Briefs on the Required Records Case Presently Before the Court on Petition (5/7/13), here.

I have just revised the current draft of my Federal Tax Crimes book as follows:  "The two denials of petitions for certiorari would indicate that there is little likelihood of Supreme Court review unless a split occurs in the Circuits, which one can infer from the consistent Circuit holdings is unlikely."

Although unlikely, I do think a Circuit split could occur.  I think a good argument can be made -- and was made in Paul Clement's petition and reply brief -- that the developments in Fifth Amendment jurisprudence since the Supreme Court's last consideration of the required records doctrine could be read as inconsistent with the required records doctrine.  Hence, since all the Supreme Court did was deny certiorari, the Supreme Court has yet to speak on the issue of whether the developments in Fifth Amendment jurisprudence undermine a full bore application of the required records doctrine.  Critical mass in the Circuits appears to hold that the required records doctrine survives the broader Fifth Amendment conceptual shift, but that would not foreclose some other Circuit from holding that the required records doctrine does not survive, at least in its full bore application.  I don't hold out a lot of hope for that, but I would like to see some discussion and reconciliation of the developments in Fifth Amendment jurisprudence to the required records doctrine.  For now, the best discussion of that is in Paul Clement's reply brief on the T.W. petition for ceriorari.

For All required records discussions on this blog, click here.

Interesting Article With Inviting Opening on Upjohn Warnings (5/17/13)

Professional and law student readers will likely know what "Upjohn warnings" are.  In the classic internal investigation, lawyers representing the entity may interview individuals within the entity.  In order to insure that the individuals are not confused about who the investigating lawyers represent -- they represent the entity and not the individual -- good form and ethics require that the lawyers give adequate notice to the individual.  The notice is commonly referred to as "Upjohn warnings."  See Upjohn Co. v. United States, 449 U.S. 383 (1981).  I previously wrote on the issue Upjohn Warnings in Entity Investigations (Federal Tax Crimes Blog 10/14/09), here.

The current New York Times Magazine has an interesting article which begins with an Upjohn warning.  Anita Raghavan, Rajat Gupta’s Lust for Zeros (NYT 5/17/13), here.  I excerpt that opening:

Late one Friday morning, Rajat Gupta was rushing through security at Philadelphia International Airport, carry-on in tow, when his cellphone rang. When Gupta heard from Goldman Sachs, on whose board he sat, it was often from its chief executive, Lloyd Blankfein. But on this morning, it was Gregory K. Palm, his old Harvard Business School classmate and the bank’s general counsel, on the line. Palm sounded unusually serious. So Gupta asked if he could call him back from the other side of security. 

When he did, Palm quickly made two odd disclosures. First, he told Gupta that he had arranged for a colleague to listen in on their conversation. Then he said, “We are representing the corporation, and not you.” Palm wanted to make sure that there was no doubt that this was not a privileged conversation. If the matter evolved into something bigger, their discussion could be handed over to law-enforcement officers.
As Gupta listened, Palm stuck to the script that he worked out beforehand. “What can you tell me about Raj Rajaratnam, and have you ever provided him with information about what we do?” he asked.

Two More UBS Depositors Indicted; Big Numbers Involved (5/17/13)

Two Florida Doctors have been indicted "for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks."  The DOJ Tax Press release is here; the indictment is here.  They were enabled by Beda Singenberger, a person who has figured prominently in my blogs and a previously indicted enabler, see blogs on Singenberger, here.  The key information is below::

Defendants:  Drs. David Leon Fredrick and Patricia Lynn Hough, husband and wife.
Charges:  Conspiracy (1); Tax Perjury (4)
Maximum Incarceration:  Conspiracy - 5 years; Tax Perjury 12 years (4 counts times 3 years each), but actual sentence will be determined by the Sentencing Guidelines subject to departures or Booker variances which are common.
Enablers:  Beda Singenberger an unnamed UBS banker ("UBS Banker D.L.")
Banks:  UBS, "Swiss Bank No. 1" (Geneva Private Bank), "Swiss-Liechtenstein Bank No. 1" (Swiss subsidiary of Liechtenstein Bank 1), "Liechtenstein Bank No. 1" (a Private Bank and parent of SLB #1), Swiss Cantonal Bank No. 1 (providing banking services), UK Private Bank No. 1.
Entities/Nominees:  Yes.  A number were involved, both real entities and "Nominee Entities" (these were incorporated in various jurisdictions).

The key portions of the press release:

According to the indictment, Fredrick and Hough, married doctors, served on the Board of Directors of two Caribbean-based medical schools – one located on Saba, Netherlands Antilles, and one located on Nevis, West Indies. Fredrick had an ownership interest in the medical school on Nevis until 2007, when both medical schools were sold.  

The indictment alleges that Fredrick and Hough conspired with each other and with Beda Singenberger, a citizen and resident of Switzerland who is under indictment in the Southern District of New York, and a UBS banker to defraud the IRS. They carried out the conspiracy by creating and using nominee entities and undeclared bank accounts in their names and the names of the nominee entities at UBS and other foreign banks to conceal assets and income from the IRS, including the sale of real estate associated with the medical school on Saba and shares they owned in the medical school on Nevis. The real estate was sold for more than $33 million, all of which was deposited into one of their undeclared accounts in the name of a nominee entity.

IRS to Require Search Warrants for All Emails from ISPs (5/15/13)

There has been a brouhaha recently about the IRS accessing older emails on an ISP's site without a search warrant.  I previously wrote about the issue in this blog entry:  Are Emails Stored on the ISP's Computer Subject to Fourth Amendment Protections? (7/28/12), here, discussing the holding in United States v. Warshak, 631 F.3d 266 (6th Cir. 2010).  Briefly, the wording of the Electronic Communications Privacy Act of 1986 gave the IRS the argument that a warrant is not needed to obtain electronic communications older than 180 days,  That eventually caused a firestorm just recently.  As a result of the heat about the issue, the IRS has announced, here, the following policy statement:

Policy Statement 4-120 
Approved: May 3, 2013
(1) Policy Regarding Requests for the Content of Email Communications under the Electronic Communications Privacy Act and the Stored Communications Act.
(2) The IRS will follow the holding of United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), and obtain a search warrant in all cases when seeking from an internet service provider (ISP) the content of email communications stored by the ISP. Accordingly, such information will not be sought from an ISP in any civil administrative proceeding.
(3) Any existing IRS guidance that is not in accord with the foregoing policy statement will be updated. 

The following is from a TNT article discussing this development (Eric Kroh, IRS Says It Will Obtain Search Warrants for All Emails, 2013 TNT 90-2 (5/9/13)):

An IRS spokesman, when asked whether the May 8 statement applies to all electronic communications or to e-mails only, replied, "We are currently aware of and reviewing this issue, our policies, and our guidance, and will update them as appropriate."

Allen Charge Issues - Jurors, You Can / Must Decide (5/15/13)

In United States v. Walshe, 2013 U.S. App. LEXIS 9149 (10th Cir. 5/6/13), here, an unpublished opinion, the Court dealt with some typical but unexceptional issues in a case involving tax and theft issues.  I thought readers might be interested in the Allen Charge instruction which derives from Allen v. United States, 164 U.S. 492 (1896).  For some background on the Allen charge, see the Wikipedia entry here. The Allen charge is usually given to a jury when it has difficulty reaching a unanimous verdict.  That means that it is given after the jury has deliberated for a while and advised the court it is having difficulty.  The charge comes in several variations, depending on circuit, but essentially tells that jury that they have heard the evidence and should with diligence and care be able to reach a unanimous verdict.  I offer more general material on the Allen charge at the end of this blog entry after presenting the discussion of Walshe.

Here is the example of the Fifth Circuit's pattern Allen charge which is quoted in the Wikipedia entry:

"Members of the Jury:
I'm going to ask that you continue your deliberations in an effort to reach agreement upon a verdict and dispose of this case; and I have a few additional comments I would like for you to consider as you do so.
This is an important case. The trial has been expensive in time, effort, money and emotional strain to both the defense and the prosecution. If you should fail to agree upon a verdict, the case will be left open and may have to be tried again. Obviously, another trial would only serve to increase the cost to both sides, and there is no reason to believe that the case can be tried again by either side any better or more exhaustively than it has been tried before you.
Any future jury must be selected in the same manner and from the same source as you were chosen, and there is no reason to believe that the case could ever be submitted to twelve men and women more conscientious, more impartial, or more competent to decide it, or that more or clearer evidence could be produced.
If a substantial majority of your number are in favor of a conviction, those of you who disagree should reconsider whether your doubt is a reasonable one since it appears to make no effective impression upon the minds of the others. On the other hand, if a majority or even a lesser number of you are in favor of an acquittal, the rest of you should ask yourselves again, and most thoughtfully, whether you should accept the weight and sufficiency of evidence which fails to convince your fellow jurors beyond a reasonable doubt.
Remember at all times that no juror is expected to give up an honest belief he or she may have as to the weight or effect of the evidence; but, after full deliberation and consideration of the evidence in the case, it is your duty to agree upon a verdict if you can do so.
You must also remember that if the evidence in the case fails to establish guilt beyond a reasonable doubt the Defendant should have your unanimous verdict of Not Guilty.
You may be as leisurely in your deliberations as the occasion may require and should take all the time which you may feel is necessary.
I will ask now that you retire once again and continue your deliberations with these additional comments in mind to be applied, of course, in conjunction with all of the other instructions I have previously given to you."

On Res Judicata in Criminal Case from Prior Civil Case and On Criminal Statute of Limitations (5/15/13)

In United States v. Wanland, 2013 U.S. Dist. LEXIS 64598 (ED CA 5/6/13), here, the Court denied three defense motions to dismiss.  I don't think there is anything particularly important about the holdings, but one of the issues permits me to digress on related concepts and another issue offers a good analysis of the law.  So, I offer the case and further discussion here.

1.  Res Judicata.

Prior to indictment, the defendant had received a bankruptcy court "final judgment discharging the Defendant's debts and liabilities to the Internal Revenue Service ('IRS')."  As quoted in footnote one, 11 U.S.C. § 523(a) (1) (C) provides that

[a] discharge . . . of this title does not discharge an individual debtor from any debt . . . with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.

The defendant was not entitled to an order of discharge of his tax liabilities that he attempted to evade.  He did get the discharge.  Presumably the IRS was represented in the proceeding.  The case does not state whether the IRS asserted nondischargeability because of evasion and lost the assertion in the bankruptcy court.

The defendant argued that, based on principles of res judicata or claim preclusion, the bankruptcy discharge precluded the IRS from asserting any crime related to the taxes discharge which required that the defendant have evaded tax, an issue that the defendant urged had already been resolved against the Government in the bankruptcy case.  The Court held that the criminal prosecution could not have occurred in the bankruptcy proceeding and therefore that the Government was not precluded from bringing the counts based on evasion of the taxes discharged.  The Court reasoned:

The Dangers of the Unrecorded Interview by Criminal Agents -- FBI or IRS (5/14/13)

A crime often trotted out in criminal tax cases is 18 USC 1001(a)(2), here, the crime of false statements.  Often, for example, the first time the taxpayer knows that he is under investigation is when two IRS CI Special agents show up at his home or office, unannounced.  The taxpayer is caught off-guard and often will respond to the questions without preparation and often without concern for precision in the words -- either in listening carefully to the questions asked or in formulating the answers given.  That interview can be a disaster.  It is true that the agents will -- at least should -- give the modified Miranda warnings that the taxpayer is not required to answer questions and may consult an attorney.  But too many taxpayers just try to muddle through.  The taxpayers answer's -- at least as perceived by the agents -- then sometimes become the subject of a false statements charge.  Often the taxpayers perception of his answers is very different than the agents.  After the interview, one of the agents will prepare a memorandum of the interview with the Agents' version of what the taxpayer said, and have the other agent sign off on it -- so there is a contemporaneous record verified by two witnesses (not wholly disinterested witnesses, I might add).  The taxpayers' version of what he was asked and what he said may be very different, but he does not have a witness and often either does not remember crisply or does not contemporaneously commit to writing what he believes he said.  The Agents' memorandum and their memories reinforced by the memorandum can then be powerful evidence against the taxpayer.  So, it has been asked, when the stakes are so high, why don't  the CI Agents voice record the interview so that anyone in the future will then know the question asked and the answer given and something of the ambiance as permitted by the voice recording?

David Drumm, a guest blogger on the Jonathan Turley Blog, addresses this question in the context of interviews by FBI agents.  Why the FBI Doesn't Record Interrogations (Jonathan Turley Blog 5/11/13), here.  He starts off:

At a time when recording a conversation is as easy as whipping out a cellphone or iPod, the FBI policy on electronic recording of witness interviews is: “agents may not electronically record confessions or interviews, openly or surreptitiously, unless authorized by the SAC or his or her designee.” Instead FBI agents take notes and later type up a summary report called a form 302. The interview takes place with two FBI agents and the single interviewee. The FBI has eschewed the objective for the subjective.

Guest Blog: Analysis of the Data in the GAO Report (5/13/13)

Introduction:  I previously posted a blogged on the recent GAO Report on the OVDI/P initiatives.  See GAO Report Targets Strategies Other than OVDP (4/26/13), here, and More on the GAO Report on IRS Offshore Disclosure Initiatives (4/27/13), here.  A reader made some comments to one of those blogs and, thinking that the comments might be refined by the reader and useful to other readers as a stand-alone blog, I invited the anonymous reader to do a guest blog on his comment.  The reader agreed to do so, but has chosen to remain anonymous.  Accordingly, the remainder of this blog is the Anonymous reader's comments as refined for this blog entry.  I have not attempted to verify the statements and conclusions of the reader by tracking them to the GAO Report, so I encourage those interested to do so and post any of their thoughts as comments for the benefit of all readers.

Particular thanks to this anonymous reader.  The balance of this blog entry is the Anonymous reader's offering.  I have not done anything other than cut and paste the offering and provided the full link to the GAO publication.

---------------------

Finally, the GAO report on the 2009 OVDP has some data which strongly suggests that a large majority of those who entered the OVDP had tax-compliant principal and only the earnings had not been taxed. It also shows how disproportionate the FBAR penalty has been.

Link: http://www.gao.gov/assets/660/653369.pdf

Table 2 divides participants into categories based on account size. For the 10th percentile group, with median account size of $78,315 the total unpaid taxes over the six-year 2003-2008 lookback period were $103 (or $17 per year.) It would be hard to imagine anyone wilfully setting up and maintaining a foreign account to cheat for such an insignificant amount of money, yet the average FBAR penalty for this group was $13,320 or 129 times the amount of unpaid tax. Had this been unreported domestic income the fraud penalty would have been 75% of $103, or $77.

More on Conviction Rates in Tax Cases (5/12/13)

I have had several blogs on statistics, sometimes quoting the famous quote attributed to Benjamin Disreali that "There are three kinds of lies: lies, damned lies, and statistics."  Those various blogs may be viewed under the key word statistics below, here.

In some of the blogs I have questioned DOJ Tax's claims over the years of a 95% conviction rate in the tax prosecutions it brings.  Today, I address that issue again.

This past week, the IRS released its Annual Business Report on Fiscal Year 2012 National Operations, here.  That report has some statistics for 3 years that are consistent with the IRS data book, Table 18 which may be accessed here for the years back to 1995.  More about that in a minute.

On p. 4 of the 2012 Annual Report, the following statement appears:

Conviction rate is the percentage of convictions compared to the total number of convictions, acquittals, and dismissals. The conviction rate for FY 2012 is 93.0%, 0.3% more than the FY 2011 rate (92.7%).

This claim of 92.7% for 2011 and 93.0% for 2012 is not materially different from DOJ Tax's claims of a 95% conviction rate.  So, I will refer to the claims as a 95% conviction rate claim.

My first reaction was that perhaps I have been wrong to question such a high conviction rate, since, although not backed with data, the IRS's indicated methodology for calculating the conviction rate seemed sound.  But, being the skeptic, I decided to dig deeper.  I therefore offer the following analysis from the IRS's own detailed data for a longer number of years to see if I could get to the same or roughly the same indicated conviction rate.  My analysis below summarizes the more detailed analysis in a spreadsheet I offer for download here (a zip file).

Cheating is Cheating, Except When Offshore Accounts Are The Means (5/10/13)

I was quoted recently in a Wall Street Journal article.  Laura Saunders, Leniency for Offshore Cheats (WSJ 5/5/13), here, subtitled Courts Hand Down Lighter Sentences Than in Other Types of Tax-Shelter Cases.  Unfortunately, the link I have requires subscription, but I think readers of this blog will get the gist of the article from the title and subtitle.

I have received some comments that I seemed to be advocating for stiffer criminal penalties for offshore cheats.  I thought I would use my blog to give the nuance I actually intended.  I simply was saying that the discrepancy in sentencing in the two classes of cases seems inconsistent.

The particular quote that has drawn attention is:

"The cases involving offshore bank accounts are drawing lighter sentences than other criminal tax cases," said Mr. Townsend, who practices at Townsend & Jones LLP in Houston. He calls the discrepancy "troubling, because cheating is cheating."

The point I was making is that, based on my understanding of the law (particularly the Sentencing Guidelines), the difference should not exist. I will give an example:

IRS, UK and Australia Joint Efforts on Offshore Accounts (5/9/13)

Reports are that the IRS is teaming with UK and Australian tax authorities to chase down taxes on income in offshore accounts.  Michael Cohn, IRS, UK and Australian Tax Authorities Uncover Information on Offshore Tax Evaders and Advisors (Accounting Today 5/9/13), here.  Exceprts are:

The Internal Revenue Service is teaming up with tax authorities in the United Kingdom and Australia to battle offshore tax havens after uncovering new information on specific taxpayers and advisors. 

The tax administrations from the U.S., Australia and the U.K. announced a plan Thursday to share tax information involving trusts and companies that hold assets on behalf of residents in jurisdictions throughout the world. The IRS said the three nations have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.  

The data they have acquired purportedly contains both the identities of the individual owners of these entities, along with the advisors who assisted in establishing the entity structure. 

The IRS said it has been working together with the Australian Tax Office and the U.K.’s HM Revenue & Customs to analyze the data they have acquired and have already uncovered information that may be relevant to the tax administrations of other jurisdictions. The IRS said they have also developed a plan for sharing the data, along with their preliminary analysis, if requested by those other tax administrations.

I did not realize this earlier, but the key new information in the article is pretty much taken from IR-2013-48, May 9, 2013, titled "IRS, Australia and Unite Kingdom Engaged in Cooperative Effort to Combat Offshore Tax Evasion," here.

Eight Circuit Denies Claim for Restitution Reduction for Unconvicted Wife's Alleged Share of Tax Liability (5/8/13)

In United States v. Perry, ___ F.3d ___, 2013 U.S. App. LEXIS 9210 (8th Cir. 2013), here, the defendant was convicted for four counts of evasion (Section 7201) for years in which he received kick backs.  The taxpayer raised a number of garden-variety points on appeal, and all were rejected by the Court of Appeals.  I address only one today because I had not seen it before and thought students might find it interesting.  Apparently, during the years he took the kickbacks and failed to pay report and pay the taxes, the defendant was married and filed a joint return with his wife.  The sentencing court required that he pay restitution (principal and interest) on the tax liability as a condition of supervised release.  That liability, of course, was a joint and several liability (unless the wife qualified for innocent spouse relief, which was not indicated in the case).  But, if the defendant had to pay the restitution, then his wife would have to pay nothing on their joint and several liability.  That annoyed him because, he claimed, they were now divorced and she benefited from the income and taxes not paid and equitably should pay some (meaning, in the context in which he raised the claim, the amount of the award for restitution should be decreased).

Here is the entire discussion of the claim and the Eighth Circuit's resolution:

4. Finally, Perry argues the district court should have "split" his restitution tax liability because it is "grossly unfair" to permit ex-wife Tammy to reap more than half the benefits from their joint tax evasion in the subsequent divorce, while making Perry repay the IRS's entire loss. This is not an issue of law because the restitution statutes only grant authority to "apportion liability" among multiple defendants, and Tammy was not a co-defendant. See 18 U.S.C. § 3664(h). Therefore, we question whether the district court had discretion to order Perry to pay an amount of restitution less than the IRS's entire tax loss; joint filers are jointly and severally liable for income tax deficiencies. See 26 U.S.C. § 6013(d)(3). But even if the court had such discretion, it was not abused. Noting that the IRS may seek recovery of taxes owed from either Tammy or Perry, the district court eliminated any risk of double recovery by expressly providing that "[t]he restitution amount attributable to the tax deficiency shall be reduced by any portion of the tax deficiency received by the Internal Revenue Service from Tammy Perry, Mr. Perry's ex-wife." That was an eminently fair ruling.

Of course, if the wife were an innocent spouse, the defendant would have to foot the entire tax, interest and penalties anyway.  But, if she were not an innocent spouse and if the IRS chases the restitution first, both under general remedies and the relatively new Code provisions permitting immediate assessment of tax restitution against a defendant, the IRS will move against the husband and collect it all if it can.  (See my blog on the new Code provisions, New Statute for Civil Effect of Restitution in Tax Cases (at Least Title 26 Crimes of Conviction) (Federal Tax Crimes 2/11/11), here.)

HSBC India Reported to be Cooperating with DOJ and IRS and Projecting Significant Penalty (5/8/13)

The Times of India has this article:  HSBC fears 'significant' penalty in NRI tax evasion probe (Times of India 5/8/13), here.  Excerpts are:

Global banking major HSBC has said it may face "significant" penalties from the US authorities with regard to an ongoing probe into suspected tax evasion by the US-based clients of its Indian unit, among other cases. 

The US tax department is investigating possible evasion of federal income taxes by the American residents of Indian origin through use of their accounts with HSBC India. 

HSBC said in a regulatory filing last night that it is cooperating with the US Department of Justice and the Internal Revenue System (IRS) in their probes into whether certain HSBC companies and employees acted appropriately in relation to certain customers with US tax reporting requirements.

The article also addresses another exposure due to an SEC investigation "related to HSBC Private Bank Suisse SA's cross-border policies and procedures and adherence to US broker-dealer and investment adviser rules and regulations when dealing with US resident clients."

Petition for Certiorari and Briefs on the Required Records Case Presently Before the Court on Petition (5/7/13)

I recently wrote on the filing of a petition for certiorari a case raising the issue of the continuing viability of the required records doctrine that the courts of appeals have recently applied in offshore bank record subpoena cases to override the Fifth Amendment privilege through the Act of Production doctrine.  See Petition for Cert filed in FBAR Required Records Case (Federal Tax Crimes Blog 1/18/13), here.  The case is In re Special February 2011-1 Grand Jury Subpoena dated September 12, 2011, T.W. v. United States, 691 F.3d 903 (7th Cir. 2012), petition for cert (Sup. Ct. No. 12-853).   The Supreme Court docket on the case is here.  In my prior posting, I provided a link to the petition for certiorari.  I write today to provide that link again, along with links on the other filings, including amicus briefs.

T.W.'s Petition for Writ of Certiorari, here.

Government Brief in Opposition, here.

T.W.'s Reply Brief, here.

Amicus Briefs

1. Briefs of Counsel for Similarly Situated Jane and John Does, here.
2. Brief of Former Officials with the Department of Justice, Tax Division, and Internal Revenue Service, here.
3. Brief of New York County Lawyers' Association, here.

For those with limited time, I do recommend T.W.'s Reply Brief.

Article on Collateral Compliance That May Attend Criminal Tax Misconduct (5/7/13)

Joshua D. Blank, here, has published an article titled Collateral Compliance on SSRN.  The SSRN page is here.  The following is the abstract:

Collateral Compliance 

Joshua D. Blank  

New York University School of Law 

February 25, 2013 

University of Pennsylvania Law Review, Forthcoming 

NYU Law and Economics Research Paper No. 12-06 

Abstract: 

As most of us are aware, the failure to comply with the tax law can lead to civil and criminal tax penalties. But tax noncompliance has other consequences as well. Collateral sanctions for tax noncompliance, which are imposed on top of tax penalties and are often administered by agencies other than the taxing authority, increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States. Criminal law scholars have written dozens of articles on the collateral consequences of convictions. Yet tax scholars have virtually ignored collateral tax sanctions, even though their use by the federal and state governments is growing.