Financial Times FT.com

IRS joins probe into tax haven

By Bertrand Benoit in Berlin, Robert Anderson in Stockholm and Guy Dinmore in Rome

Published: February 26 2008 20:17 | Last updated: February 26 2008 20:17

International pressure on Liechtenstein to relax its strict bank secrecy rules grew on Tuesday after the US said it was investigating more than 100 taxpayers suspected of using accounts in the Alpine principality to avoid tax.

Australia, France and Sweden also revealed they were investigating residents with money in Liechtenstein banks. Italy said it was studying a list of account holders and considering investigations.

The revelations come less than two weeks after the start of Germany’s biggest tax evasion investigation, using a list of 1,400 account holders acquired by the BND intelligence service from a former employee of LiechtensteinÕs LGT bank for €4.2m. Berlin has offered to share the data with other tax authorities.

On Monday, it emerged the British HM Revenue & Customs was investigating Liechtenstein account holders using information from the same whistleblower. HMRC said it expected to recover about £100m in unpaid taxes.

In a statement, the US Internal Revenue Service said it was “initiating enforcement action involving more than 100 US taxpayers to ensure proper income reporting and tax payment in connection with accounts in Liechtenstein”.

It said the US, Australia, Canada, France, Italy, New Zealand, Sweden, and the UK were “working together following revelations that Liechtenstein accounts are being used for tax avoidance and evasion”.

“We are determined to protect the United States tax system from abuse and ensure that taxpayers pay what they owe, ” Linda Stiff, the IRS Acting Commissioner, said. “Anyone with hidden income and gains would be well-advised to make a prompt and complete disclosure to the IRS.׏

The raft of investigations highlights the growing impatience among member states of the Organisation for Economic Co-operation and Development at Liechtenstein’s refusal to assist other jurisdictions in fighting tax evasion.

The Australian tax office said it had already raided the houses of taxpayers suspected of holding accounts in Liechtenstein as part of an operation pre-dating the German investigation. “There are 20 audit cases underway relating to funds in Liechtenstein ranging from $200,000 to millions of dollars,” Michael D’Ascenzo, the Australian tax commissioner, said.

Sweden stressed it was not using the BND’s controversial list, believed to contain information about 800 accounts held by investors outside Germany.

The Danish government said it considered the list “stolen goods” and would not ask to see it. “We didn’t get this information from Germany and we didn’t pay anything,” said Leif Rosenfeld, head of the international department of Skatteverket, Sweden’s tax authority. Skatteverket said its probe of Swedish accounts in Liechtenstein was the result of its own research and information from other OECD tax authorities.

The French Budget ministry said the tax authorities were examining “information concerning people who might hold bank accounts open to being used for tax evasion in Liechtenstein.”

A tax expert said that all governments mentioned were part of several international forums of tax authorities that routinely share information on suspected offenders.

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