Alert
Alert
06.01.11
On April 7, 2011, the U.S. Department of Justice petitioned the District Court for the Northern District of California to allow the Internal Revenue Service to serve a "John Doe" summons on U.S. affiliates of HSBC Holdings plc, seeking to determine whether U.S. residents are using accounts at the bank's facilities in India to evade U.S. taxes. The District Court signed the proposed order the same day. The John Doe summons allows the IRS to obtain the names of U.S. taxpayers with accounts at HSBC in India without having to identify the account holders.
If the recent spate of audits and summons enforcement actions involving U.S. taxpayers with accounts at Union Bank of Switzerland is any model, U.S. taxpayers with deposits exceeding $10,000 in HSBC accounts in India can expect to be contacted by the IRS concerning delinquent Foreign Bank Account Reports (“FBARs”) and any undisclosed income arising from those accounts. Moreover, the fact that the summons request was filed in the Northern District of California is a strong indication that the IRS is focusing on taxpayers residing in the Northern District, which includes Silicon Valley.
Foreign Account Reporting
FBARs
Every United States person having a financial interest in or signature or other authority over a bank, securities or other financial account outside the United States during a particular calendar year must file an FBAR (Form TD F 90-22.1) on or before June 30th of the following year, if the aggregate value of those foreign accounts exceeded $10,000 at any time during that particular calendar year. Reports with respect to calendar 2010 are due June 30, 2011.
Download: Foreign Accounts: Recent IRS Enforcement Activity; June 30 Reporting Deadline