Bombshell: Liechtenstein to Lift Bank Secrecy on Tax Evasion Cases

Offshore tax haven Liechtenstein has agreed to a landmark deal with the U.S. to drop bank secrecy in cases of tax evasion and could make similar concessions in the European Union.

Prince Nikolaus, a member of Liechtenstein's ruling royal family who brokered the deal, told Reuters the former tax haven had agreed to a "significant" change to bank secrecy rules that entitles the U.S. to bank account information when probing tax evasion.

I surely thought Switzerland would fall to U.S. pressure before Liechtenstein. They must have pictures of Prince Nikolaus doing something he is not supposed to be doing.

Switzerland, where tax evasion is not a criminal offense, continues to refuse to cooperate with the U.S. on tax evasion cases.

Caught Not Paying His Taxes, Top Tax Legislator Writes A Check

File under: Balls, Hypocrisy.

Rep. Charles Rangel(D-NY) wrote six checks for about $10,800 in back taxes, and then penned an open letter to New Yorkers Friday, saying he has done nothing dishonorable, AP reports.

The federal government tab ended up being $4,803, according to Rangel's accountants, while he wrote checks totaling $6,022 to New York State. The state figure includes a small percentage owed to the New York City authorities.

Penalties and interest were not included in those payments, said his chief of staff, George Dalley.

"If the IRS chooses to impose them, of course he'll readily pay them," said Dalley.

Rangel is chairman of the tax-writing Ways and Means Committee.

-Robert Wenzel

Tax Evader Will Remain Top Tax Legislator

Representative Charles B. Rangel will not step down from the chairmanship of the House Ways and Means Committee.

Rangel’s lawyer, Lanny Davis, told reporters during a conference call today that the House speaker, Nancy Pelosi, supports his decision to remain in the chairmanship.

Davis added: “Mr. Rangel believes, I believe and his colleagues believe that making inadvertent errors with no intention to conceal, no personal enrichment and no corruption of the public trust, is not disqualifying. He is prepared to let his constituents make the final judgment on his fitness to serve. Whatever the facts are, he has not dishonored the House, he has not dishonored himself he has not done anything intentionally wrong.”

Rangel (D-NY) has admitted that he earned more than $75,000 of income from a Dominican Republic villa, after the New York Post reported the details in an exclusive report. He did not report the income to the IRS or on Congressional disclosure forms.

Rangel acknowledged on Monday that there were even more errors and omissions on his financial disclosure forms, and said he would hire a forensic accounting company to pore over his records.

He is currently under investigation by the House Ethics Committee with regard to the matter.

The House Ways and Means Committee writes all Federal tax code.

-EPJ Newsdesk

IRS Schedules Conference Call With Top Accounting Firms To Solicit Help In Detecting Hidden Foreign Bank Accounts

In the latest twist in attempting to uncover hidden bank accounts that Americans may have at foreign banks, the IRS is planning to speak on Tuesday to six accounting firms about how they could help find foreign banks that fail to appropriately identify US customers holding investments or income in offshore accounts.

According to FT, a conference call has been scheduled between the IRS and Deloitte, Ernst & Young, KPMG, PwC, Grant Thornton, and BDO Seidman.

It is not clear what the upside to the accounting firms would be to aggressively help the IRS with this type information, especially if some of the firms may have offered suggestions to their clients on how to structure foreign accounts in a manner that circumvented IRS reporting requirements.

According to FT:

...the discussion is expected to centre on the so-called US Qualified Intermediary programme, which created an arrangement starting in 2000 between banks and the US authorities allowing a degree of client confidentiality in return for the provision of certain client information. The US rules cover individuals but not companies, meaning that individuals could exploit the rules to channel assets to non-declarable companies created in tax havens.

The IRS has greater assurance that taxes are properly withheld “because QIs agree to have external auditors perform oversight of their compliance with required procedures”, according to a 2007 report by the Government Accountability Office, the investigative arm of the US Congress. But it also said: “Within their limited scope, auditors of QIs are not responsible for following up on possible indications of fraud or illegal acts.”

In a parallel development, on Tuesday, a federal judge gave the IRS permission to serve a “John Doe” summons on UBS that would direct the bank to produce records identifying US taxpayers who held undeclared accounts between 2002 and 2007 with the bank and chose to have them hidden from the IRS.