The US tax authorities will soon launch another prosecution against a foreign bank for facilitating offshore tax evasion, a la the case against Swiss bank UBS AG, according to an IRS agent speaking with Reuters. (See, e.g., Pascal Fletcher, “IRS: new UBS-style foreign bank prosecution ‘shortly’,” Reuters, http://www.reuters.com/article/idUSTRE62E4OW20100315?feedType=RSS.) Last year, UBS was accused of aiding and abetting offshore tax evasion by U.S. citizens. UBS settled two U.S. lawsuits against it, agreeing to pay a $780 million fine and also agreeing to turn over account records to U.S. authorities. The threat to turnover account records led to many prior undeclared accounts being disclosed to U.S. tax authorities through a specially tailored voluntary compliance program, which expired on October 15, 2009, and, the pre-existing IRS voluntary compliance standards.
Charles Rangel (D – New York) temporarily stepped down as chairman of the House Ways and Means Committee until a continuing probe by the House ethics committee into ethics violations concludes. Rangel has been scrutinized for possible ethics violations for corporate payments, failure to pay taxes, failure to report assets on federal disclosure forms, misuse of rent-controlled apartments in New York, and improper solicitation of donations for the Charles B. Rangel Center for Public Service at the City College of New York. Sander Levin (D – Michigan) has been elevated to chairman in Rangel’s absence.
In what can be described as wishful thinking, in a vote of 386 to 33, the House passed H.R. 946, the “Plain Writing Act of 2010,” which would require government agencies to write in plain English. The term ‘‘plain writing’’ means writing that “the intended audience can readily understand and use because that writing is clear, concise, well-organized, and follows other best practices of plain writing.” Notably, however, the Plain Writing Act of 2010 would not apply to regulations.
As discussed in one of our prior issues of Tax Talk (see MoFo Tax Talk, Volume 1, Issue 4) in September of 2008, J.P. Morgan Chase and Co. (“JPM”) purchased all of the assets of Washington Mutual (“WaMu”) for approximately $1.9 billion and assumed its deposit liabilities and debt (including covered bond obligations). A controversy later ensued with respect to who was entitled to WaMu’s tax losses—the bank holding company (and its creditors), or JPM. The Wall Street Journal recently reported (see Scott Thurm and Dan Fitzpatrick, “Tax-Break Battle Flares,” WSJ Online, March 24, 2010) that JPM could benefit from a tax refund of up to $1.4 billion from its acquisition of the assets of WaMu due to the economic stimulus bill, which provides for a provision that relaxes the carryback limitation of net operating losses of corporations to up to five years. The carryback relief, however, restricted TARP recipients from receiving the benefit. Although JPM was a TARP recipient, WaMu was not, possibly allowing JPM to reap the rewards of the new law through its acquisition of WaMu assets. The FDIC, however, is not yet signed off on permitting JPM to share in the refund.