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IRS Wants HSBC Accountholder Information

Offshore Account Update, UBS / HSBC

Posted on June 29, 2016 |

A redacted letter from HSBC to a customer with accounts at HSBC's private bank in Geneva, Switzerland is raising new concerns about financial institutions turning over offshore accountholder information to the Internal Revenue Service (IRS).

The IRS and Department of Justice (DOJ) have been making a concentrated effort to convince banks to voluntarily turn over detailed information about U.S. accountholders who fail to fully comply with tax rules. The IRS is also taking steps to force financial institutions to provide details on U.S. citizens who may have undeclared offshore accounts.

When the IRS and DOJ get information on accounts from foreign banks, this information can be used to come after individual investors with criminal charges or in an effort to collect large fines and penalties. Anyone who is concerned that their bank may provide information to the IRS should strongly consider getting advice from a Boston criminal tax lawyer.

There are options to voluntarily disclose previously undeclared offshore accounts in order to limit penalties, but the window to take advantage of this option closes if you're already under investigation.

Redacted HSBC Letter Raises Concerns for Accountholders

The redacted letter from HSBC to a private banking client indicated that the IRS had made a request for specific financial details to be turned over about offshore accounts.

In 2014, a law in Switzerland changed the rules to allow banks to give information about accounts to authorities before notifying accountholders in cases where advance notice would jeopardize an investigation. Despite this law change, HSBC's letter appears to provide preliminary notice to the accountholder before HSBC gives up the accountholder's financial details.

The letter sent by HSBC appears to be the result of a group request sent April 11 for accountholder detail. The fact that HSBC had received requests from the IRS to provide information is also important for accountholders to be aware of, because of potential broader implications.

The IRS and DOJ have created a Swiss Bank Program aimed at encouraging banks to enter into non-prosecution agreements which include the payment of fines and the provision of information. Category 1 banks weren't eligible for the Program since they were already being investigated. HSBC is a Category 1 bank. 

The IRS has primarily focused on asking for info about accountholders from Category 2 banks. Category 2 banks are the banks who are eligible for non-prosecution agreements if they give up accountholder detail.  The IRS expansion into asking for info from a category 1 bank could indicate anew broader effort to go after all alleged tax evaders.

HSBC's letter advises the accountholder to come into compliance with U.S. tax laws. It also alerts accountholders to the fact that the government will soon have their account information when HSBC turns it over.

Kevin Thorn, a criminal tax lawyer in Boston, can offer insight into the different ways the owner of an offshore account can try to come into compliance with IRS requirements while limiting the financial damage that could occur. Call today to get help before it becomes too late to voluntarily disclose in an effort to limit penalties and avoid criminal charges.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989

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