IRS Updates List of Foreign Financial Institutions or Faciliators with Bank Leumi and Sovereign Management & Legal Ltd. (12/26/14)

The IRS has updated its list of Foreign Financial Institutions or Facilitators, here.  One function of this list is to identify banks that the insided OVDP penalty rate increases to 50%. (See FAQ 7.2, here.)

The new list is as follows (with the additions in bold-face):

• UBS AG
• Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
• Wegelin & Co.
• Liechtensteinische Landesbank AG
• Zurcher Kantonalbank
• swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
• CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
• Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
• The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
• The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
• Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates
• Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA

For the Federal Tax Crimes Blogs postings on the newly added institutions, see:

• Bank Leumi Admits Tax Wrongdoing, Agrees to Deferred Prosecution agreement, and Agrees to $400 Million Payments (Federal Tax Crimes Blog 12/22/14), here.
• New Direction for John Doe Summonses to An Enabler's Service Providers Subject to Summons Power (Federal Tax Crimes Blog 12/19/14), here.

IRS Gets New John Doe Summonses for Bank of Butterfield & Son Ltd. and Affiliates (11/13/13)

The IRS has obtained John Doe Summonses to U.S. banks regarding both ZKB and The Bank of N.T. Butterfield & Son Ltd., a Bermuda bank with subsidiary offices in Cayman Islands (see Wikipedia entry here).  As previously reported in this blog, JDS were issued to  Citigroup Inc's Citibank NA and Bank of New York Mellon Corp.  New John Doe Summons to U.S. Banks for Information About Correspondent Offshore Banks (Federal Tax Crimes Blog 11/10/13), here.

The DOJ Tax press release is here (I just cut and paste for now and will link it later; bold facing in the body of the release is provided by me):

COURT AUTHORIZES IRS TO ISSUE SUMMONSES FOR RECORDS
RELATING TO U.S. TAXPAYERS WITH OFFSHORE BANK ACCOUNTS

Five Banks Directed to Produce Records for Accountsat Zurcher Kantonalbank, The Bank ofN.T. Butterfield & Son Limited and Affiliates 

TUESDAY, NOVEMBER 12, 2013 

WASHINGTON -- U.S. District Judge Kimba M. Wood of the Southern District of New York entered an order on Nov. 7, 2013, authorizing the IRS to issue summonses requiring Bank of New York Mellon (Mellon) and Citibank NA (Citibank) to produce information about U.S. taxpayers who may be evading or have evaded federal taxes by holding interests in undisclosed accounts at Zurcher Kantonalbank and its affiliates (collectively, ZKB) in Switzerland; and U.S. District Judge Richard M. Berman of the Southern District of New York entered an order today authorizing the IRS to issue summonses requiring Mellon, Citibank, JPMorgan Chase Bank NA (JPMorgan), HSBC Bank USA NA (HSBC), and Bank of America NA (Bank of America) to produce similar information in connection with undisclosed accounts at The Bank of N.T. Butterfield & Son Limited and its affiliates (collectively, Butterfield) in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom. U.S. Attorney for the Southern District of New York Preet Bharara, Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally, and Acting Commissioner of the Internal Revenue Service (IRS) Danny Werfel made the announcement today. 

In these actions, the Court granted the IRS permission to serve what are known as "John Doe" summonses on Mellon, Citibank, JPMorgan, HSBC, and Bank of America. The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown. The John Doe summonses approved today direct these five banks to produce records identifying U.S. taxpayers with accounts at ZKB, Butterfield and their affiliates, including other foreign banks that used ZKB and Butterfield's U.S. correspondent accounts at Mellon, Citibank, JPMorgan, HSBC, and Bank of America to service U.S. clients. 

"These cases once again demonstrate the department's resolve to uncover and identify taxpayers who tried to hide money overseas as a way to avoid federal taxes," said Assistant Attorney General Keneally. "These John Doe summonses will provide information about individuals using financial institutions from Switzerland to the Cayman Islands to Hong Kong to avoid their U.S. tax obligations. U.S. taxpayers still holding accounts who have not come clean should come forward and do the right thing before it's too late." 

"Today's action show that the use of foreign banks for tax evasion remains a high investigative priority of this office and U.S. citizens should understand that loud and clear," said U.S. Attorney Bharara. "By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who try to evade their legal responsibility to pay taxes." 

"International issues remain a major focus for the IRS, and we are continuing our efforts to fight tax evaders who use offshore accounts to skirt the law," said IRS Acting Commissioner Werfel. "These John Doe summonses for correspondent account records show our determination to pursue evaders using offshore accounts, even if the person hiding money overseas chooses a bank that has no offices on U.S. soil." 

IRS Offshore Voluntary Disclosure programs and initiatives enable U.S. taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution by voluntarily disclosing previously undisclosed foreign accounts and income. To date, U.S. taxpayers have identified 371 previously undisclosed accounts at ZKB and 81 such accounts at Butterfield. In addition, a number of U.S. taxpayers with beneficial ownership and control over funds held in accounts at ZKB and Butterfield have admitted failing to report income earned from their offshore accounts on their federal tax returns. The IRS has reason to believe that other U.S. taxpayers who held or presently hold similar accounts at ZKB, Butterfield, and their affiliates have done the same in violation of federal tax law. In December 2012, three employees of ZKB were indicted for conspiring with U.S. taxpayers and others to hide at least $423 million from the IRS in secret Swiss bank accounts.