DOJ Tax Targeting Swiss Life Insurance Companies Offering Insurance Wrappers to Help U.S. Taxpayers Evade Tax (9/16/17)

DOJ Tax is reportedly looking at Swiss life insurance companies who participated in providing so-called insurance wrappers to hide U.S. taxpayer's investments.  I offer a recent article and then two other older items for more information.

John Revill, Oliver Hirt, UPDATE 1-Swiss Life speaks to DOJ about possible tax evasion by U.S. clients (Reuters 9/14/17), here.

Swiss Life could face a fine in the United States after it was contacted by the U.S. Department of Justice (DOJ) about whether it helped U.S. clients avoid tax, Switzerland’s biggest life insurer said on Thursday. 

The disclosure comes as U.S prosecutors have been widening their probe of Swiss banks who have been helping wealthy American clients dodge taxes to include insurance companies. 

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The Zurich-based company started selling the products in 2006, but stopped selling them in the United States in 2012. Swiss Life returned funds to hundreds of American clients who had invested in insurance wrappers linked to bank accounts at Bank Frey in 2013, The Wall Street Journal has reported.

Reuters Staff, U.S. looks at Swiss insurers in offshore probe: WSJ (Reuters 2/24/2014), here.

Insurers in Switzerland have been preparing for months for U.S. officials to investigate products known as insurance wrappers - life insurance policies into which the very wealthy place stocks, private equity holdings and other bankable assets, allowing them to lower their tax rate.

Justice Department Announces Resolution under Swiss Bank Program with Union Bancaire Privée, UBP SA (DOJ Tax 1/6/16), here.

UBP maintained undeclared accounts at UBP for U.S. clients in the nominee names of non-U.S. insurance companies.  Such accounts, known commonly as insurance wrappers, were titled in the names of insurance companies but were funded with assets that were transferred to the accounts for the beneficial owners of the insurance products.  Insurance wrappers were marketed to Swiss Banks by third-party providers in the wake of the UBS investigation as a means of disguising the beneficial ownership of U.S. clients.  For example, in November 2009, UBP worked with a third-party service provider to assist a U.S. beneficial owner in restructuring three existing ac=counts he held at UBP in the names of nominee Panamanian entities into three accounts owned by the insurance company. 

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Effective January 2001, UBP entered into a Qualified Intermediary (QI) Agreement with the IRS.  The QI Agreement was designed to help ensure that, with respect to U.S. securities held in an account with UBP, non-U.S. persons were subject to the proper U.S. withholding tax rates and U.S. persons were properly paying U.S. tax.  As a consequence of UBP entering into a QI Agreement with the IRS, UBP allowed U.S. clients to create and open accounts in the name of sham offshore entities and insurance wrappers.  Certain UBP employees caused UBP to certify compliance with the QI Agreement event though the true beneficial owners were not reflected in the IRS Forms W-8BEN in the account files.  UBP also divested U.S. securities from its undeclared U.S. accounts for the purpose of subverting its QI Agreement.