London: An investigation of HSBC Holdings by US tax authorities has stepped up the government's request seeking authorisation to pursue information on thousands of Americans who may have used accounts in India to evade taxes.
The Internal Revenue Service asked a US judge in Oakland, California, for permission to serve a so-called John Doe summons to get information about Americans using HSBC's Non-Resident Indians, or NRI, services. The IRS cited the January 26 indictment of client Vaibhav Dahake, who is accused of conspiring with five HSBC bankers to hide Indian accounts from US tax authorities.
"It is not only reasonable to believe, it is abundantly clear that thousands of other NRI clients in the United States may have failed to meet their obligations to disclose those accounts - and pay tax on the income," Justice Department attorney Stuart Gibson wrote in court papers filed Thursday.
The request signals a sharp increase in US pressure on HSBC, Europe's largest bank by market value, to cooperate in a widening probe of offshore tax evasion. UBS AG, the largest Swiss bank, avoided US prosecution in 2009 by paying $780 million (Dh2.86 billion), admitting it helped Americans evade taxes and disclosing data to the IRS on account holders.
"While we haven't seen the summons, HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes," Juanita Gutierrez, a bank spokeswoman, said in an e-mail.
Constructive dialogue
"While complying with the law in all the jurisdictions in which it operates, including India, HSBC cooperates with requests from US authorities."
Gutierrez said the bank has been "engaged in a constructive dialogue with US authorities" and hopes the John Does summons matter "can be resolved expeditiously".
The IRS seeks data from HSBC USA about accounts holders at HSBC India from 2002 to 2010. Through September, about 9,000 US residents were "Premier" clients with NRI deposits of $100,000 or more at HSBC India, and only 1,391 had disclosed their accounts to the US in 2009, according to a court filing by Daniel Reeves, who runs the IRS Offshore Compliance Initiatives Programme.
Through December 2009, Premier clients had NRI deposits of almost $400 million, Reeves wrote.
Reeves said the bank helped clients conceal accounts from the IRS through a number of NRI services, citing the Dahake case. His indictment alleges that HSBC bankers said that with an Indian account, no US forms were required, he didn't have to furnish a Social Security number, and no Form 1099 reporting the interest income would be filed with the IRS.
Dahake is scheduled to plead guilty on April 11 in federal court in Trenton, New Jersey, court records show. The US had filed a similar summons in the UBS case. The UBS case helped prompt more than 18,000 Americans to avoid prosecution by revealing their secret offshore assets to the IRS, agency Commissioner Douglas Shulman said April 6 in Washington.
