WASHINGTON — US tax authorities are probing Indian expatriates who may have hid money offshore in HSBC Bank to evade US taxes, the Justice Department said Thursday.
In an expansion of its mounting offensive against overseas tax evasion, the Internal Revenue Service is seeking data on clients of two HSBC India offices in the United States
The offices allegedly encouraged Indian nationals to open accounts back in their native land, telling them that they could hide the accounts and not pay US taxes on earnings from them, the department said in a statement.
The government has now asked a federal court in San Francisco for authorization to ask HSBC Bank USA for information about those clients, “many of whom are believed by the government to have hidden their accounts from the IRS.”
The Justice Department said that in 2002 HSBC India opened a representative unit at an HSBC USA office in New York, expressly targeting Indians living in the United States to open offshore accounts.
A second unit was opened in 2007 in Fremont, California — a San Francisco-area hub of expatriate Indians — with similar goals, it said.
Customers of the two units told US investigators that they were assured “that they could invest in accounts at HSBC India without paying US income tax on interest earned on the accounts, and that HSBC would not report the income earned on the HSBC India accounts to the IRS.”
The petition to the San Francisco court arose out of a New Jersey tax fraud indictment.
IRS Commissioner Douglas Shulman said the San Francisco court petition was aimed at getting more information “to help us determine if additional actions are needed.”
“Our international efforts are not about just one country or one bank — it?s about our wider effort to ensure compliance with the nation?s tax laws,” he said in the statement.
The move comes on the heels of concerted US actions against tax evasion via Swiss banks, which has focused especially on officials and customers of UBS and Credit Suisse banks.
HSCB’s US subsidiary did not comment on the specifics of the case, but said in a statement that it was “engaged in a constructive dialogue with US authorities.”
“HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes by US taxpayers.
“While complying with the law in all the jurisdictions in which it operates, including India, HSBC cooperates with requests from US authorities.”