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Tax Leak Consequences Depend on Details

The individuals and companies whose offshore account information may be detailed in Swiss banking documents disclosed to WikiLeaks could face American prosecutors — or go untouched, senior tax lawyers said on Tuesday.

WikiLeaks
Thomas Coex | AFP | Getty Images
WikiLeaks

Whether the more than 2,000 wealthy investors and companies from the United States, Europe, Asia and elsewhere get a knock on the door from the Internal Revenue Service or other American agencies will depend in large part on if the documents contain detailed records showing criminal tax evasion.

“It’s obviously tremendously worrisome for these people, because every time a whistle-blower has said he has the goods, he’s had the goods,” said Peter R. Zeidenberg, a white-collar criminal defense lawyer at DLA Piper.

He was referring to internal bank documents and client names provided to American authorities in recent years by Bradley C. Birkenfeld, a former private banker at the Swiss bank UBS, and by Heinrich Kieber, a former data clerk at the LGT Group, the Liechtenstein royal bank. Mr. Birkenfeld’s disclosures underpinned a Justice Department investigation into UBS, which agreed to pay $780 million and admit to criminal wrongdoing with its offshore private bank.

But Mr. Zeidenberg added that “simply holding an offshore bank account is not a crime. If some of these people have already reported their accounts” on their American tax returns — if they were required to file them — “or voluntarily disclosed them to the I.R.S., they may have nothing to fear.”

The documents were handed over to Julian Assange, the founder of WikiLeaks, in London on Monday by Rudolf M. Elmer, a former senior private banker at Julius Baer. Mr. Elmer, who has a history of legal conflict with Julius Baer, one of the oldest and most secretive Swiss banks, ran the bank’s Caribbean operations as chief operating officer for eight years until he was dismissed in 2002.

Mr. Elmer is set to go to trial on Wednesday in Zurich on charges brought by Swiss prosecutors that he leaked client data around 2005 and engaged in threats against the bank and some employees. Julius Baer has previously said that Mr. Elmer has leaked falsified documents.

It is not clear what years are covered by Mr. Elmer’s WikiLeaks documents or if they concern years after he left the bank.

But the possible age of the documents may not be a hurdle to tax collectors. The pursuit of many civil tax cases often has a statute of limitations of three to six years, but Scott D. Michel, a tax lawyer at Caplin & Drysdale, said that it did not apply if the I.R.S. could prove that individuals required to file American returns committed tax fraud by hiding money in secret offshore accounts. The I.R.S. could audit their returns from more recent years as well, he added.

“Would I be scared to be on this list?” Mr. Michel asked. “Absolutely yes.” Mr. Zeidenberg added that while American prosecutors investigating tax evasion were interested in individuals, they were “more interested in the financial institutions” that sold tax evasion services.

Mr. Zeidenberg said that he had heard that people who feared they might be on the list were asking whether they should voluntarily disclose their accounts to the I.R.S. But Mr. Michel noted that anybody who came forward after their names were disclosed could face criminal prosecution and would not be eligible for the reduced fines and penalties associated with voluntary disclosure.

Michelle Eldridge, an I.R.S. spokeswoman, declined to comment on the documents on Tuesday. Mr. Elmer did not respond to e-mail requests for comment.