Tax Lawyer's Blog

Liechtenstein Alps

The New York Times in an article titled Liechtenstein to Share Some Secrets of its Bank reports that,

Liechtenstein, a tiny Alpine country, will now in limited circumstances turn over to United States investigators the bank records of American clients suspected of tax evasion. The agreement also covers questionable uses of a tactic, known as transfer pricing, that is widely employed by multinational American corporations to lower their tax bills.

It will, however, turn over information only on those American investors who are already under investigation by the U.S. Government.

That catch led some tax authorities to call the agreement window-dressing. “It doesn’t do anything,” said Jack A. Blum, an authority on offshore fraud. “They’re offering to give up what we already know.”

The agreement to turn over investor information was triggered in part by the 2002 theft of confidential investor information by an employee of LGT Group, a  financial giant run by the royal family of Liechtenstein.

The employee, Heinrich Kieber, provided the data to tax authorities in Britain, Germany and the United States, which contend it details billions of dollars of tax evasion by 1,400 LGT clients, including 150 in the United States.

In the last year, the Bush administration has directed investigatory efforts on foreign companies and governments that assist American taxpayers in tax fraud or evasion. And the pressure is likely to accelerate when President-elect Barack Obama takes office on January 20th.

Mr. Obama has gone on record as saying he intends to crack down on offshore tax havens and the tax evasion schemes of the mega-rich.

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