US taxman gets after Indian-Americans

[Hafizzz]

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US taxman gets after Indian-Americans
US taxman gets after Indian-Americans - The Times of India

When you do a good deed, get a receipt, just in case heaven is like the IRS, goes the sagely tax advice in America. Some 9000 Indian-Americans are about to discover that tales of the dreaded Internal Revenue Service's omnipresence are not entirely exaggerated.

While millions of Americans are sweating it out to file their tax returns before the April 15 deadline, Uncle Sam's taxman has zeroed in wealthy Indian-Americans suspected of using their native land to stash away undeclared money and evade taxes. Yes; while India has long believed its wealthy has stashed away money abroad, the wheel has turned a full circle. The US now says its Indian-American citizens are using India as a tax haven.

In a surprising move that takes the American hunt for hidden money beyond the usual Swiss and Caribbean tax havens, the US Justice Department's civil tax division on Thursday asked a Federal Court's permission to force the London-based HSBC Bank to disclose names of thousands of wealthy Indian-American clients who it says maintain accounts with more than $ 100,000 in the bank's India branches -- ostensibly to hide it from the IRS taxman.

In a 47-page statement filed before a San Francisco court, the IRS said there were 9,000 US residents of Indian-origin who had $100,000-minimum-balance accounts at HSBC India but that fewer than 1,400 had disclosed existence of their accounts. US laws require citizens to disclose any foreign account containing $10,000 or more.

The US hunt for Indian-American tax evaders follows a case early this year when federal prosecutors nailed Vaibhav Dahake, a US citizen and an HSBC client for tax evasion by stashing money in India. According to documents filed with the government's petition, on Jan. 26, 2011, a grand jury in Newark, New Jersey, indicted Dahake, charging him with conspiracy to defraud the United States by using undeclared accounts in the British Virgin Islands and at HSBC India.

According to those documents, employees of HSBC Holdings plc and its affiliates operating in the United States assured Dahake that accounts maintained in India would not be reported to the IRS.

US authorities, attributing the information to HSBC's website, say that in 2002 HSBC India opened a "representative office" at an HSBC USA office in New York City to enable ''Non-Resident Indians'' (NRIs) living in the United States to open accounts in India. In 2007, HSBC India allegedly opened a second representative office at an HSBC USA office in Fremont, Calif., purportedly "to make banking transactions more convenient for the NRI community based in California." Although HSBC India closed those offices in June 2010, the government alleges that NRI clients may still access their accounts at HSBC India from the United States.

According to the petition documents, NRI clients have told IRS investigators that HSBC's NRI representatives in the United States assured them that they could invest in accounts at HSBC India without paying US income tax on interest earned on the accounts and that HSBC would not report the income earned on the HSBC India accounts to the IRS.

"The Department of Justice is committed to ensuring that all US taxpayers meet their obligations to declare and pay taxes on foreign bank accounts," John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department's Tax Division, said in a statement. "The ability to hide accounts in foreign countries is rapidly dwindling. We will continue working hand-in-hand with the IRS to enforce the tax laws against those who are using offshore accounts – wherever they are located – to evade taxes."

The IRS focus on India and Indian-Americans follows a campaign against undeclared offshore accounts held by US taxpayers, primarily in tax havens such as Switzerland and the Caribbean. In a landmark case in 2009, the IRS went after UBS AG for allowing U.S citizens hide their assets and evade taxes. UBS coughed up $780 million in fines, and more importantly, turned over some 4000 names in a precedent-setting case.

"The IRS continues to focus its attention on international tax evasion," IRS Commissioner Douglas Shulman said on Thrusday about the HSBC India case. ''This summons request is focused on obtaining more information to help us determine if additional actions are needed. As I've said all along, our international efforts are not about just one country or one bank – it's about our wider effort to ensure compliance with the nation's tax laws."

Meanwhile, an HSBC spokesperson in New York told wire services that the bank has been engaged in a "constructive dialogue" with US authorities and hoped the issue can be resolved expeditiously. "HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes by US taxpayers," spokeswoman Juanita Gutierrez said, adding that the bank complies with the law in all the jurisdictions and cooperates with requests from US authorities.

Tax payers should pay tax.

[Thomas]

not to many countries of the world were the IRS can't see how much you have stashed.

[Hafizzz]

Indian American pleads guilty in tax evasion case
The Hindu : News / International : Indian American pleads guilty in tax evasion case

An Indian-American businessman on Monday pleaded guilty to conspiring to defraud U.S. tax authorities by hiding his bank accounts in HSBC India, a case which has led U.S. Internal Revenue Service to probe NRIs holding accounts in the bank.

Vaibhav Dahake, 44 of Somerset, New Jersey pleaded guilty before U.S. District Judge Freda Wolfson to an indictment charging him with one count of conspiracy to defraud the Internal Revenue Service (IRS) and concealing undeclared bank accounts in India, a statement by the U.S. Attorney’s Office, District of New Jersey said.

Dahake, who was indicted in January this year, is scheduled to be sentenced on July 22, 2011.

He faces a maximum sentence of five years in prison and a $250,000 fine, or twice the amount of financial gain accrued to him or loss to the IRS.

Additionally, Dahake has agreed to pay a 50 per cent civil penalty for failing to file reports of foreign bank or financial account relating to his undeclared bank accounts for the calendar years 2004-2009, during which the accounts had the highest balance.

“New Jersey businessman Vaibhav Dahake admitted today that he conspired to hide his assets from the IRS by stashing them in India. As all taxpayers prepare to file their annual returns, we remind them and their financial institutions not to cheat their fellow citizens by defrauding the IRS,” U.S. Attorney Paul Fishman said.

The guilty plea comes just four days after the U.S. Department of Justice sought a federal court order requiring HSBC Bank to provide information about U.S. residents, particularly non-resident Indians, who may be using HSBC India accounts to evade income taxes.

In its petition to a San Francisco court, the Justice Department had cited Dahake’s case, saying he conspired to defraud the U.S. by using undeclared accounts in the British Virgin Islands and at HSBC India.

The U.S. government asked the court to allow the IRS to serve a ‘John Doe’ summons on HSBC under which the bank would have to produce records identifying U.S. taxpayers with accounts at HSBC India, many of whom are believed by the government to have hidden their accounts from the IRS.

“Those who still think they can hide their assets and income offshore to evade taxes need to rethink their strategy.

The Department of Justice is committed to prosecuting such individuals,” Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division John DiCicco said.

According to documents filed, Dahake was helped by five HSBC employees in concealing his accounts in India in order to avoid paying taxes in the U.S.

Dahake admitted that from 2001 through 2010, he maintained undeclared bank accounts in India that he failed to report on his federal income tax returns.

The accounts were maintained at a “large international bank” which was headquartered in England and maintained offices throughout the world, including in India, Singapore, Hong Kong and the US.

You can run but you can't hide.

[Roybot]

Are we really going to post individual crimes here on PDF?

[Hafizzz]

Are we really going to post individual crimes here on PDF?

Say that to Indian users who often post articles about individual crimes involving Pakistani and Chinese people.

[somebozo]

US tax man is on the loose..loooks like outsouricing wasnt a good idea after all!

[below_freezing]

Taxes in the US are a crime against humanity, literally. They are stolen from the poor, and used to feed the US war machine, much like North Korea. But North Korea at least has free health insurance, something the US doesn't have.

[Kevrai]

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Taxes in the US are a crime against humanity, literally. They are stolen from the poor, and used to feed the US war machine, much like North Korea. But North Korea at least has free health insurance, something the US doesn't have.

this is what Amnesty International thinks of North Koreas health care
North Korea's crumbling health system in dire need of aid | Amnesty International