Liechtenstein, an Alpine country of 36,000 people, has told American clients of the principality’s oldest bank that U.S. authorities have requested their account data as they widen a tax-evasion probe.
Accounts at Liechtensteinische Landesbank AG (LLB) that contained at least $500,000 at any time since the beginning of 2004 are covered by the information request, according to a letter dated May 31, 2012 sent to clients by the Liechtenstein’s tax authority. Liechtenstein facilitated the so-called group request from the IRS by amending the tax information exchange agreement with the United States in March 2012. Those affected by the U.S. request for information have the right to appeal, according to the letter.
The amendment that extends the period of applicability back to the tax year 2001 in the administrative assistance law with the U.S. is limited to 12 months from May 1, 2012.
The IRS requests information about accounts with a year end value of at least US$ 500,000 titled in the name of individual US tax payers or owned by non-US entities that have US beneficiaries. The request is limited to account that were opened on or after January 1, 2004 and accounts that were in existence on that date.
In the Liechtenstein group request, U.S. authorities are also targeting lawyers, accountants, financial advisers, asset managers and those responsible for professional “asset protection,” who “conspired with a U.S. taxpayer to commit U.S. crimes or provided assistance,” according to the letter.
LLB account holders have an opportunity to participate in the procedure to ensure that their rights are protected. Account holders need to inform the Liechtenstein tax authorities of their desire to participate in writing within 14 days of the receipt of the letter.
Should the tax authorities determine that the account of an account holder is covered by the IRS request, they have to inform the account holders (and trustees and representatives. The account holder has 14 days after receipt of the notice to challenge the release of banking information in Liechtenstein courts.
Those affected by the U.S. request for information have the right to appeal, according to the letter.
Landesbank declined to comment on whether the handover of account data under the group request would allow the bank to enter a deferred prosecution agreement.
Liechtenstein started to unwind secrecy after data stolen from LGT was used by Germany to prosecute tax evaders in 2008. Former Deutsche Post AG (DPW) Chief Executive Officer Klaus Zumwinkel was convicted of tax evasion and received a two-year suspended prison sentence plus a penalty of 1 million euros ($1.25 million).
Under pressure from the U.S., Germany and France, Liechtenstein said in March 2009 that it would conform with tax standards set out by the Organization for Economic Cooperation and Development to avoid being blacklisted as a tax haven.
Read more at: Tax Times blog
