Bank Pays $400m Fine For Aiding US Tax Evasion
A leading Israeli bank has agreed to pay the US government $400 million compensation for helping US customers evade tax.
Bank Leumi confessed to advising 1,500 wealthy Americans how to evade taxes over several years.
The bank ran secret meetings in hotels, restaurants and other places away from offices in New York, Los Angeles and Miami to cover up their business and to avoid leaving a paper trail and witnesses to the subterfuge.
The fines and compensation include a $157 million settlement concerning tax issues with US customer accounts in the bank’s Swiss branch.
The bank’s executives have also agreed to meet strict governance agreements laid down by the US Justice Department.
FATCA pledge
Leumi will designate a liaison officer responsible for working with the US Internal Revenue Service (IRS) and an officer at each branch who is responsible for supervising reporting under the Foreign Account Tax Compliance Act (FATCA).
FATCA demands the bank registers as a compliant organisation and makes annual reports on the financial affairs of US resident taxpayers controlling bank accounts and investments with a balance of $50,000 or with a limit of $200,000 if they are a US expat.
Under US tax law, expats must report their worldwide income each year to the IRS. T
he bank has also had to agree not to open accounts controlled by US customers unless the customers pledge to report their financial affairs to the IRS and not to close accounts controlled by US customers who have not reported their assets.
Instead, the bank must disclose these assets under the FATCA regime.
Tax investigations
The US is also investigating alleged tax evasion by Israel’s Bank Hapoalim and the Mizrahi Tefahot Bank.
“This investigation has been underway for three years and has at last come to a satisfactory conclusion,” said a US Treasury Department spokesman.
“Along with action against dozens of Swiss banks, we hope the result shows out resolve in dealing with tax evasion wherever it goes on in the world.”
FATCA was introduced in 2010, but only requires foreign financial institutions to report the details of American controlled accounts from July 2014.
Among the accusations against the bank and several subsidiaries was a claim that employees helped US customers shield the true nature of the financial income from the US tax authorities by setting up bogus companies in Belize.
Source: iexpats – Bank Pays $400m Fine For Aiding US Tax Evasion
