tag:blogger.com,1999:blog-1519969502186924526.post8937728277037659645..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: HSBC Skullduggery Further Exposed (1/9/15)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1519969502186924526.post-33225391761649856362015-02-10T11:29:00.024-06:002015-02-10T11:29:00.024-06:00Seems you are not alone:
http://www.theguardian.c...Seems you are not alone:<br /><br />http://www.theguardian.com/commentisfree/2015/feb/10/with-penalties-so-weak-tax-evasion-is-worth-the-risksissyfussynoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-4615187992310182132015-02-10T11:15:05.102-06:002015-02-10T11:15:05.102-06:00I agree completely with Jack, as someone who has s...I agree completely with Jack, as someone who has sat in meetings where precisely that risk reward analysis was trotted out and accepted. <br /><br />But the analysis doesn't end there: oftentimes, the tax misconduct will not be one compact item which if caught will trigger a large tax but a bundle of items, EACH bundle split up into different pieces to make the whole harder to detect. Absent an insider advising the IRS, it will often be nigh impossible for the IRS to figure out the entire scenario. <br /><br />And there will be the "too big to litigate" factor, which runs that the IRS will not want to litigate situations that might devour its resources (or cynically, it will hide behind that fence in order to avoid doing its job). Big law and accounting firms are often confident the IRS will concede good issues for pennies on the dollar for big corporations and wealthy individuals rather than litigate them.<br /><br />So it seems clear to me that the 75% fraud penalty is way too low and conversely (perhaps perversely) the penalty mechanism the IRS/DOJ employs in relation to offshore bank accounts (and interestingly certain overstatements of tax basis) offers the right deterrence disincentive. <br /><br />To add to Jack's point, perhaps if the facilitators (i.e., banks, accounting and law firms) could be held jointly or severally liable for the taxes and penalties (looking through entities to individuals) as conspirators you would see a sharp fall off in aggressive tax maneouvring--because you would have changed substantially the risk/reward analysis for those who put the deals in front of taxpayers.<br /><br />This might make an interesting discussion Jack worthy of its own post.sissyfussynoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-44501742261003903792015-02-10T09:42:38.788-06:002015-02-10T09:42:38.788-06:00Actually, I was trying to just focus on the civil ...Actually, I was trying to just focus on the civil fraud penalty and ask whether it is the appropriate level penalty only for the income tax delinquency. Many would argue that the 75% penalty is actually to low -- significantly too low -- given the benefits of playing the audit lottery with the strain on the IRS's resources. In other words, even with the risk of the 75% penalty, the risk-taking taxpayer would take the risk because the risk-reward ratio is so favorable. There is little risk that the taxpayer will be discovered or penalized, so the punishment if discovered and penalized does not discourage or properly penalize the behavior.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-4416988825151402582015-02-10T09:07:09.945-06:002015-02-10T09:07:09.945-06:00Regarding the 75% vs 200% penalty, you are not con...Regarding the 75% vs 200% penalty, you are not considering the up to 50% of account balance FBAR penalty. I'm sure most of the people convicted in the US would have gladly just paid a 200% of taxes owed rather than what they agreed to pay.Andre Weissnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-87245952737620610182015-02-09T12:33:45.008-06:002015-02-09T12:33:45.008-06:00Not to hijack your blog Jack, but here is a link t...Not to hijack your blog Jack, but here is a link to the current story being run in the UK by the BBC, a highlight of which I extract for your readers. Panorama is a highly respected investigative news program operated by the BBC (the rough equivalent of 60 Minutes but much more detailed, aggressive, and impartial IMHO):<br /><br />"But Panorama has spoken to a whistleblower who said there were still problems with tax dodging at HSBC private bank when she worked there in 2013.<br /><br />Sue Shelley was the private bank's head of compliance in Luxembourg. She said HSBC did not keep its promise to change. "I think the verbal messages were great but they weren't put into practice and that disturbed me greatly," she said.<br /><br />It was her job to make sure HSBC followed the rules, but she said she was sacked after raising concerns. She has since won a tribunal hearing for unfair dismissal.<br /><br />Watch Panorama: The Bank of Tax Cheats on February 9 at 20.30 GMT on BBC1."<br /><br /><br /><br />Seems clear HSBC is continuing to do what it did before, just moved the chess pieces somewhere else, as I remarked in my earlier post. <br /><br /><br />What is clear is this story has legs, at least in the UK.sissyfussynoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-91352130908815606962015-02-09T11:48:56.357-06:002015-02-09T11:48:56.357-06:00The other half of the story is why the Tax Divisio...The other half of the story is why the Tax Division of the DoJ sat on this client account data for the last 5 years. Just who are they trying to protect, again?!Source7noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-2094093500513868432015-02-09T10:55:05.930-06:002015-02-09T10:55:05.930-06:00This was also covered in 60 Minutes last night.
...This was also covered in 60 Minutes last night. <br /><br />It was well-known that Geneva was the North American and European center for HSBC's illegal activity. The protagonists were the propel HSBC acquired when it bought the old Safra Republic Bank. <br /><br />What is surprising (to me at least) is that neither the U.S. nor UK tax authorities pursued HSBC more aggressively. As I wrote above, many knew what HSBC/Republic in Geneva was all about, including the IRS. <br /><br />In addition, HSBC was a major purveyor of ultra-aggressive tax shelters for hedge and private equity funds costing the U.S. Teasury tens of billions of revenue. again, the IRS did not shut it down--in fact it blossomed post 2009. <br /><br />Next step for HSBC: hire a big law firm to do an internal (read "independent") that will find that the tainted activity was narrowly confined to a few bad actors and senior management knew knothing, saw nothing or did nothing wrong. and anyway, this an old story--look at HSBC now! <br /><br />Rant if my day: it's hard to say which is worse: the banks or the so-called professionals who aid and abet them. Are you paying attention Thomas Piketty?sissyfussynoreply@blogger.com