Tax-Evader Crackdown Spreads to Hong Kong

By Jason Farago,  Newser Staff
Posted Aug 17, 2009 8:40 AM CDT
Tax-Evader Crackdown Spreads to Hong Kong
A deal with Switzerland settling US demands for the names of more than 50,000 suspected tax dodgers has a lot of wealthy Americans with offshore accounts nervously running to their tax advisers.   (AP Photo/Keystone, Alessandro Della Bella, file)

The IRS and Justice Department crackdown on UBS is widening, reports the Wall Street Journal, as new documents reveal the efforts the bank took to keep its clients' wealth away from the taxman. Two recent cases have relied on channeling millions to a Swiss account owned by a Hong Kong-based enterprise. In one instance, a UBS banker told an American tax dodger that "a lot of United States clients don't report their income."

According to court documents, a lawyer advising the American on using the Hong Kong shell company advised him to set up yet another umbrella organization on top of that, in order to "allow for an extra layer of privacy." While Hong Kong does not have Switzerland's strict bank secrecy rules, it has come under fire for not sharing tax information, and lawyers say the IRS may face hurdles investigating the dummy companies.
(More UBS stories.)

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