Last week, the Swiss banking giant UBS agreed to turn over information on American clients suspected by the IRS of using Swiss accounts for tax evasion.  On Wednesday, August 19, IRS Commissioner Douglas Shulman said that the agency is looking at other banks and intermediaries in Switzerland in addition to UBS. 

The IRS Commissioner was not kidding.  Last Thursday the Justice Department indicted a Swiss banking executive and a Swiss lawyer for selling tax evasion services to wealthy clients.  The services allegedly involved the use of Swiss accounts as part of an unlawful scheme to disguise and hide assets.  The indictment, filed in the United States District Court in Ft. Lauderdale, Florida, accuses a director of a Swiss bank as well as a Swiss lawyer with conspiracy to defraud the United States.  The men are accused of helping clients hide assets by creating the appearance that certain assets of U.S. clients belong to Swiss citizens.  The men were also accused of falsifying documents to disguise interests of United States citizens in certain offshore funds.  It appears that the Justice Department established a special task force in 2007 to focus on Swiss banks that help Americans evade taxes.  Recent actions seem to be the result of some of these investigations. 

The message from the indictments is very clear:  not only will the IRS and the Justice Department investigate large financial institutions like UBS — but they will also be looking at smaller banks and financial institutions who may be helping U.S. citizens to unlawfully hide assets.  Lawyers who facilitate these unlawful schemes may also become targets of the IRS and the Justice Department.

Only fools and criminals participate in offshore schemes that are designed to evade U.S. income tax obligations.  Legitimate asset protection planning does not involve unlawful tax evasion.  It involves keeping assets essentially in plain sight, while lawfully minimizing taxes and taking advantages of laws that allow you to make assets more difficult for creditors to reach.

You can read more about the recent indictments as well as the Justice Department’s on-going attack on Swiss banking secrecy in an August 21, 2009 article in The New York Times