Caribbean Bank is Focus of IRS Hunt for Tax Evaders

Wednesday, May 29, 2013

The Internal Revenue Service (IRS) is investigating a Caribbean bank formerly co-owned by Barclays to determine if American tax cheats used its accounts to hide money from the tax agency.


FirstCaribbean International Bank (FCIB) was formed in 2002 following the merger of Barclays’ banking operations in the Caribbean and those of the Canadian Imperial Bank of Commerce (CIBC). Barclays owned a significant amount of stock in FCIB until December 2006, when it sold its stake.


But the IRS probe is seeking information about FCIB accounts that existed as far back as 2004. Investigators also are interested in “some activity directly involving Barclays branches in the Caribbean before the formation of FCIB,” James Ball wrote at The Guardian.


CIBC, which currently has a majority stake in FCIB, maintained “correspondent” accounts with Wells Fargo for offshore access within the U.S. CBIC and Wells Fargo are working together to respond to the IRS inquiries.


IRS agent Cheryl Kiger wrote in a court statement that she “discovered information about a US taxpayer…who had opened numerous bank accounts at FCIB and its predecessor Barclays bank in a Caribbean jurisdiction in his own name and in the names of various shell companies he controlled.”


As part of her investigation, Kiger used data obtained from IRS programs that allow previous U.S. tax evaders to voluntarily disclose details of their crime in exchange for receiving reduced penalties and no jail time. To date, more than 39,000 tax evaders have fessed up through those programs, resulting in a recoupment of $5.5 billion by the IRS. Of those cases, there are at least 129 that involved FCIB and its Caribbean predecessors.


The IRS’s Caribbean investigation is not seeking information from the banks about their own practices, nor has it suggested that the banks are aware of its customers’ activities and motives.


Off-shoring income has become popular in recent years, according to the Government Accountability Office, which said that between 2007 and 2010 the number of people reporting foreign accounts to the IRS nearly doubled to 516,000 accounts.

-Noel Brinkerhoff, Danny Biederman


To Learn More:

US Tax Inspector Targets Caribbean Bank (by James Ball, The Guardian)

39,000 Tax Cheats Come Forward Under New IRS Programs (by Stephen Ohlemacher, Associated Press)

Battling Tax Evasion, IRS Finds 'Substantial' Data on Offshore Accounts (by Bernie Becker, The Hill)

Biggest U.S. Companies Stash 40% of Profits Offshore to Avoid Taxes (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Super-Rich Hide at Least $21 Trillion in Tax Havens (by Noel Brinkerhoff, AllGov)         

A Corporate Tax Rule that Cost U.S. $10 Billion and Helped Double Revenues…Overseas (by Noel Brinkerhoff, AllGov)


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