The IRS investigates HSBC for tax evasion
A man walks past a branch of British banking group HSBC in London
Bob Moon: Let's try a quick word association exercise. When I say "secret bank account," what country comes to mind?
I'm guessing the most popular answer is likely to be Switzerland. If I mention "off-shore tax haven," I'll venture the survey says: The Cayman Islands.
Your thoughts probably didn't turn right away to India. But today there's word the IRS is investigating Indian-Americans for tax evasion. Here's Marketplace's Jeff Tyler.
Jeff Tyler: The IRS wants banking giant HSBC to share information about people evading taxes through accounts in India. In a statement, HSBC says it has complied with laws in all the countries where it operates. Clients, on the other hand, might not have declared bank accounts outside the U.S.
Gary Hufbauer: There's a form you declare it on. And if you don't declare it, you've already violated the law.
That's Gary Hufbauer, senior fellow at the Peterson Institute for International Economics.
Hufbauer: Evasion is much, much more extensive outside the United States. I know in India and much of Latin America, the tax system is regarded as something you avoid, not something you pay.
He estimates that the alleged Indian-American tax evasion could be worth hundreds of millions of dollars -- but not billions. Still, he says the IRS's action is significant.
Hufbauer: I think we're seeing a trend here and I expect it to grow.
After successfully going after the Swiss bank UBS, the Internal Revenue Service is expected to target other international banks.
I'm Jeff Tyler for Marketplace.