Thursday, October 7, 2010

Practitioners Complain About U.S. Reliance on Thieves Who Steal from Thieves Who Assist U.S. Taxpayers Cheat on Taxes

Practitioners are all atwitter about the U.S. obtaining information -- presumably for consideration of some sort -- misappropriated from offshore banks and using that information to convict or impose serious civil penalties against persons who joined (conspired might be the right word) with the offshore banks to hide income from the IRS. Among the arguments against such use is that the U.S. is then conspiring with those bank information thieves which is perhaps itself a crime or at least reprehensible conduct even though the target of that activity are offshore bank thieves and their U.S. tax cheat depositors. Thinking by analogy, I suppose it is equally reprehensible if the U.S. were to pay drug cartel employees for information on how to convict drug traffickers or grab their bank accounts. But, the question is, whether that type of conduct is reprehensible or the price we pay for a more civilized society. This debate will not be settled here.


  1. Crybabies. Sorry, but that issue was decided by the Supreme Court along time ago, and I am not referring to Payner. The case is here:

    Not likely to be reconsidered now, especially for an offshore account holder.

  2. In both Payner and Burdeau, each court found, somewhat fancifully, that the Government did not have any control over the actual taking of the property. Concern is here expressed over the incentive for employees of banks (and law firms?) to provide otherwise confidential information to the government for remuneration, even though breaching all sorts of other legal and contractual obligations. The enhancements to the whistleblower statute, IRC 7623, only preclude an award to someone who participated in the tax evasion, not stealing the data. Is this the kind of law we want: anything goes as long as it enhances the fisc. I look forward to seeing the official reaction when someone steals data from a US or EU bank and sells it to the Russian Tax Police.

  3. I suppose the same comment could be made about paying people in drug syndicates for information that will bring woe to their cohorts. Or what if we could coax out information from foreign bank employees regarding bank transactions of drug cartels? Or what if we could better fight terrorists by obtaining illegal access to their bank information. I am not saying that tax cheats are as bad as drug dealers or terrorists, but in context of the investigative tools that may be employed to bring them to justice, the difference may not be great enough to justify treating tax cheats with kid gloves.


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