I focus in the balance of this blog only on matters that I found particularly interesting.
1. Regarding follow-through, Ciarolo says that DOJ and the IRS are following leads they have obtained in the various efforts and are continuing to obtain from various sources "to identify and investigate U.S. accountholders who willfully concealed their foreign accounts and evaded U.S. tax, as well as those entities and individuals, foreign and domestic, that facilitated this criminal conduct."
2. Category 3 and 4 information:
Finally, Tax Division attorneys and IRS personnel are reviewing the information received from Swiss banks that fall under Category 3 and Category 4 of the program. Category 3 and 4 banks maintain that they did not commit any violations of U.S. law, and seek a non-target letter after providing information required by the program.I have written before that I am baffled that any Swiss Financial Institution would have proceeded under Category 3 or 4. See US DOJ Swiss Bank Program Categories 3 and 4 Comments (Federal Tax Crimes Blog 2/4/16; 2/7/16), here. Certainly, though, the Financial Institutions that did join under Categories 3 or 4 would have expected to have been closely scrutinized.
3. Countries Other than Switzerland:
We are looking well beyond Switzerland, into jurisdictions around the world, including those referenced in the statements of facts admitted to by the Category 2 banks in connection with the tax evasion efforts of U.S. taxpayers. These jurisdictions include, but are not limited to, the British Virgin Islands, the Cayman Islands, the Channel Islands, Guernsey, Hong Kong, Israel, Liechtenstein, Luxembourg, Panama and Singapore.4. She did not indicate that a program similar to the Swiss Bank Program would be adopted for these countries, but did state:
Individuals or entities that assisted U.S. accountholders to conceal foreign accounts and evade U.S. tax will not improve their situation by sitting back and delaying disclosure in the hope of an announcement of another program, particularly while we are actively reviewing information received and opening up additional investigations. Timeliness in coming forward and cooperating remains a critical factor in any criminal resolution.JAT Speculation: I wonder whether DOJ is now trying to identify the worst offenders in the countries listed above so that it will have a representative number of Category 1-type financial institutions that it can prosecute and will then announce some type of program for other financial institutions (perhaps patterned on the Swiss Bank Program). If that were the case, those financial institutions that can self-identify as being at high risk of being Category 1-like would be well-advised to move fast to open the kimono with DOJ Tax and strike a deal quickly that might be better than if they waited.
5. On the issue of whether, given the mass publicity about foreign bank accounts and the offshore disclosure programs, it was realistic to think that significant additional voluntary disclosures will be made and the impact on DOJ Tax's work. She answered (bold-face supplied by JAT):
After seven years of voluntary disclosure programs, nearly 200 criminal prosecutions, and the increased assessment and suits to collect FBAR penalties, a taxpayer’s claims of ignorance or lack of willfulness in failing to comply with disclosure and reporting obligations are not well-received. Similarly, we are very interested in taxpayers who filed tax returns and FBARs pursuant to the Streamlined filing procedures, or the Delinquent International Information Return or FBAR submission procedures, who falsely claimed either to have engaged in non-willful conduct or to have acted with reasonable cause.I have bold-faced this because, I suspect, many have not adequately assessed the risk of improper certifications in the Streamlined Programs.
6. She also addressed the effect of budget cuts on DOJ Tax's mission, saying DOJ Tax is back to full strength and works with IRS and US Attorneys to better focus its resources for maximum effect.