The Chief of the IRS Criminal Investigations Division was recently quoted as saying: “Fighting offshore tax evasion continues to be a top priority for IRS-CI and we will trace unreported funds anywhere in the world.”  The quote was in response to a March 2015 agreement reached between the United States Department of Justice and one of the 10 largest private banks in Switzerland.  The agreement was reached through the Swiss Bank Program started by the DOJ and announced on August 29, 2013. 

Following a recent settlement with Commerzbank AG in which the bank paid more than a billion dollars in penalties and fines, the Assistant Attorney General stated: “Financial institutions must heed this message:  banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”

U.S. citizens must report all income to the United States, even if that income is kept in accounts outside of the country. Anyone who has an offshore account is required to file an annual Foreign Bank Account Report (FBAR) to alert the treasury department to the fact that the account exists at a foreign bank.  If income is earned on offshore investments, taxes must be paid on it. 

Authorities are already convinced of the need to aggressively go after investors who may be hiding money offshore in order to avoid full compliance with tax obligations.  Estimates indicate that around $7.6 trillion in wealth is held in offshore accounts, depriving governments worldwide of around $200 billion in unpaid income tax revenue. 

UBS Bank has been hit hard by federal investigators in recent years. In 2009, the offshore bank settled claims of helping clients to evade IRS tax obligations, paying a penalty of $780 million.  The bank is now being investigated again, this time for allegedly marketing illegal investments to U.S. investors who wanted to hide the income they were earning from the Internal Revenue Service.