TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, August 24, 2013

WSJ: Offshore-Adviser Plea Marks a Shift in Tax Crackdown

WSJ Chart 3Wall Street Journal:  Offshore-Adviser Plea Marks a Shift in Tax Crackdown, by Laura Saunders:

A guilty plea by a high-level Swiss adviser who helped U.S. taxpayers hide money abroad marks a new phase of the government's campaign against secret offshore accounts, experts say. "Now it's clear that the U.S. will make deals with advisers who come clean, not just with individual taxpayers and banks," said Jeffrey Neiman, a former government prosecutor now in private practice in Ft. Lauderdale, Fla.

On Aug. 16, Edgar Paltzer, 57 years old, a Swiss lawyer formerly with the Zurich firm of Niederer, Kraft & Frey, pleaded guilty in federal court in New York to a single count of conspiracy. He faces up to five years in prison plus fines, but experts said, because of his cooperation, he is likely to receive a far shorter prison sentence, or none at all. He is scheduled to be sentenced in February 2014. ...

The case puts further pressure on U.S. taxpayers holding secret offshore accounts, because advisers might opt to protect themselves by turning in their clients. "If I were one of [Mr. Paltzer's] clients, I'd be having a heart attack," said Edward Robbins, a criminal tax lawyer with Hochman, Salkin, Rettig, Toscher & Perez in Los Angeles.

The case also expands government scrutiny to assets stored in bank vaults, according to William Sharp, a lawyer with Sharp Kemm, a firm based in Tampa and Zurich. The court ordered that five UBS AG vaults in Zurich controlled by Mr. Paltzer be sealed. Such vaults can be used to store assets such as gold, art or jewelry that often don't have to be declared to the Internal Revenue Service. However, the vaults holding them are usually tied to bank accounts that should be, say experts.

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