Friday, January 11, 2013

Bank Leumi Signals Cooperation with U.S. on Offshore Accounts (1/11/13)

Reuters reports on developments with Bank Leumi, an Israeli bank.  Lynnley Browning, Bank Leumi sends letter to U.S. customers about IRS program (Reuters 1/10/13), here.

Bank Leumi, the largest commercial bank in Israel, has urged U.S. clients to disclose information about their accounts to U.S. authorities, who are investigating Leumi and many other foreign banks over possible tax avoidance by Americans. 
In a Dec. 16 letter obtained by Reuters, Bank Leumi le-Israel BM urged U.S. clients to enter the Internal Revenue Service's voluntary disclosure program, part of a wide-ranging U.S. crackdown on offshore tax dodging. 
* * * * 
As previously reported by Reuters, Leumi and two other Israeli banks, Bank Hapoalim and Mizrahi-Tefahot , are under investigation by the U.S. Justice Department in connection with offshore private banking services that may have enabled wealthy Americans to evade taxes. 
* * * * 
Bryan Skarlatos, a New York tax lawyer with Leumi clients who got the letter, said it "is the result of ratcheted up pressure on Bank Leumi." He said U.S. officials "are asking clients questions about Leumi accounts: who the bankers were, what they said, did they come to the U.S., whose idea was it." 
* * * * 
Jeffrey Neiman, a criminal defense lawyer and former federal prosecutor who was involved in the UBS case, said U.S. officials are eager to expand their push beyond Switzerland, "and the Israeli banks have whetted their appetite."
 Also, some quotes from Shamik Trivedi, Israeli Bank's Letter Seen as Step Toward Turning Over Account Data, 2013 TNT 9-5 (1/14/13) (emphasis supplied):
Leumi is one of three Israeli banks under investigation by the Justice Department. In September the DOJ announced it was looking into allegations of tax evasion conspiracy by the Swiss branches of Leumi and two other Israeli banks, Bank Hapoalim and Bank Mizrahi-Tefahot. * * * *
Robert S. Fink of Kostelanetz & Fink LLP said it is his understanding that Leumi is negotiating with the Justice Department and that it has a tentative agreement to hand over the account information of U.S. persons, but is attempting to extract some promises from the government regarding the bank's liability and the liability of bank employees. 
* * * * 
Unlike Wegelin, which had only a correspondent account with UBS in Stamford, Conn., Leumi has offices in New York, California, Florida, and Illinois. 
* * * * 
* * * * Under FAQ 21 of the OVDP's frequently asked questions , the IRS maintains the right to exclude from the voluntary disclosure program taxpayers who have or had accounts at specific banks. The IRS has not yet announced which taxpayers, if any, fall into that category. 
* * * * 
Fink said that for taxpayers, the situation is now essentially "a race to the courthouse" with the IRS, meaning that a taxpayer has to submit his or her package under the OVDP before the IRS receives that information from the bank. * * * *
"Those who know what's happening realize that this is a precursor," and that the next letter sent by the bank might say that the names have been given or are about to be given, he [Fink] said.
Of course, once the bank gives up information on a U.S. taxpayer, it is too late to get assurance of the benefits of OVDP 2012, particularly no criminal prosecution.

1 comment:

  1. I have been watching the developments in Israel for a few months now, and wondering what the tipping point will be before this becomes a HOT political issue there and back here.

    I have seen this most recent press release.

    FATCA, Stanley Fischer – complaint asks release of $250,000 seized of “US Person” by Israeli Bank HaPoalim

    Does this represent an overly aggressive bank in Israel, or something else. That is a BIG Name listed in this Supreme Court Complaint.

    and then this one...

    IRS ramps up audits of taxpayers in Israel

    You have to wonder, given the close relationship of so many influential members of Israel government and the US, if AIPAC will have anything to say about these investigations and imposition of FATCA on the Israel state.

    Also with so many in the Jewish community voting for Dems and Obama, with many being impacted by this offshore jihad in Israel, I wonder what the consequences might be. Do they support it, or will some of that community be caught as unsuspecting victims too.

    With the long arm of the IRS now reaching onto Israeli shores, they are importing more than munitions in their "special relationship" with America. Wonder if they were expecting that! Wonder what the State Department thinks of these developments.


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