IRS expands offshore banking probe

Bloomberg News / April 28, 2009
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WASHINGTON - The Internal Revenue Service said it is preparing to seek authority to issue "John Doe" summonses to identify American clients of offshore banks beyond UBS AG.

Dan Reeves, an IRS revenue agent in charge of offshore compliance, said, "We have identified other offshore banks" that are helping Americans evade US taxes.

"We are in the process of developing additional John Doe summonses on some of those banks," Reeves said yesterday at a conference in Miami Beach. Reeves and John McDougal, an IRS trial lawyer speaking on the same panel, declined in an interview to identify which banks are involved, except to say none are US-based.

UBS, the largest Swiss bank, on Feb. 18 avoided US prosecution by admitting that it helped taxpayers hide money in Swiss accounts to avoid paying US taxes.

UBS also agreed to make changes and pay $780 million in fines and penalties.

The United States is seeking the identities of about 52,000 UBS customers in its effort to crack down on tax evaders.

UBS agreed to turn over about 300 names and has refused to provide the rest, citing Swiss bank secrecy laws.

Reeves and McDougal wouldn't say how many banks are involved, although McDougal said that in cases like this, "it's never going to be a huge number."

McDougal said the summonses are working their way through the IRS bureaucracy.

Reeves said the IRS was able to identify the new banks through leads stemming from the UBS case, information provided by whistle blowers, and other channels.