After Switzerland, Canada, India is the next target.
By Deepak Chitnis
WASHINGTON, DC: In an effort to expand the breadth of its investigation into potential tax evaders, the US government has announced that it will be looking into even more countries than before by investigating banks in several new nations, one of which is India.
The US Department of Justice has been keen to crack down on anyone who skirts paying US taxes by keeping the money in offshore bank accounts or using other loopholes to cheat the system. While the US recently entered into an agreement with neighboring nation Canada, which would allow banks in both countries to share information on anyone that they suspect may be engaging in such practices, the reach of their dedicated tax evader investigation only looked into Switzerland, which is generally considered one of the havens for off-shore banking due to its relatively lax finance and taxations laws.
Now, the US will be looking into banks in India, Israel, Luxembourg, Liechtenstein, and various countries in the Caribbean.
James M. Cole, the US Deputy Attorney-General, told a Congressional committee that these countries have banks that willingly assist in tax evasion. These banks will be investigated and forced to hand over information on any patrons that are using them to hide money from the US government, and may even face penalties of their own, although that part is not confirmed.
One reason for India coming under the microscope is said to be the increasing number of Indian immigrants coming to the US, as well as the fact that Indian Americans are the wealthiest minority demographic in the entire nation. India is also the leader in remittances received by other countries, with some $71 billion in 2013. While not all of that comes from the US, a sizeable portion of it does.
The US Justice Department has charged 73 account holders and 35 other professionals with crimes related to offshore tax evasion since 2009, with 72 of those 108 either pleading guilty of being found guilty at trial. The total restitution, plus interest, stemming from those convictions is in excess of $6 billion, but that’s small fries compared to the $100 billion the US reportedly loses annually from such activities.
Last year, at least four separate summonses were issued by the IRS to seize records regarding the accounts of Americans in banks outside the country. In August of 2013, 14 more banks had investigations launched into them regarding offshore bank accounts held by Americans, which Cole told the Congressional panel was all part of a systematic crackdown on tax evasion.
Specifically, HSBC Bank has reportedly received a summons from the US Justice Department, ordering that it hand over any information that it has on Indian Americans’ bank accounts. USA Today reports that the UK, which is also a popular destination for Indian Americans to keep their money, is going to be looked into by the US government, and former HSBC honcho Sanjay Nair has cautioned Indian-origin bank patrons to consult with their tax consultants and figure out what they should do.
To contact the author, email to deepakchitnis@americanbazaaronline.com