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The New Age oF INTerNATIoNAL CrImINAL TAx eNForCemeNT

proceedings against related individuals. In June 2019, the tax advisors and lawyers, among others, must report to
French Financial National Prosecutor (“PNF”) and the BZSt any cross-border tax schemes that could indicate
French Anticorruption Agency (“AFA”) published their first tax avoidance based on certain, specified characteristics.
joint Guidelines on the use of a CJIP to encourage coopera- BZSt and the Ministry of Finance are creating more than
tion and provide clear and reliable procedures. 23 100 new positions to combat tax fraud and tax avoidance.
To date, nearly half of the French CJIPs executed relate The Task Force has been assisting with the German
to tax fraud or money laundering of tax fraud proceeds. investigation into cum-ex trades, which involve dividend
A relatively recent example is the agreement reached with sales executed just before dividend rights expire. These
Google France and Google Ireland Ltd., following the trades create the potential of more than one claim for tax
French tax authorities and prosecutors claim that Google withheld from the dividends and paid to the tax authori-
France is the permanent establishment of Google Ireland, ties. Germany instituted pilot proceedings against two
thereby subject those revenues to French tax. Google entered British traders, who were charged and tried in November
into a tax settlement with the tax administrators in July 2019 for their role in cum-ex trades that, according to the
2019, under which it agreed to pay €465,000,000, and a government, caused a tax loss of €400,000,000. The trad-
CJIP with the public prosecutors in September 2019, under ers were convicted, sentenced to probation, and required
which it agreed to pay a criminal fine of $553,000,000. to cooperate with ongoing investigations. Germany also
At the other end of the spectrum, in February 2019, charged an attorney formerly with Freshfields with aid-
after refusing a CJIP, UBS was convicted of unlawful ing and abetting tax evasion, raised the Frankfurt offices
solicitation and aggravated laundering of the proceeds of of Dutch Bank ABN Amro, and is pursuing hundreds of
tax fraud by French clients. UBS was assessed a criminal investigations related to these transactions.
fine of €3,700,000,000, based on the value of the prop- In these times of uncertainty and the need for fiscal
erty laundered, and €800,000,000 in civil damages. UBS resources, one thing is clear—tax authorities around the
promptly appealed the decision, and the trial is scheduled world will continue to pursue those individuals and entities
for March 2021. UBS continues to deny any wrongdoing. that seek to evade or facilitate the evasion of tax and reporting
Germany is also forging ahead in the criminal tax obligations. Governments are investing substantial resources
enforcement space. In November 2019, the Ministry into their enforcement efforts and producing substantial
of Finance established a Tax Fraud Task Force, based in results. In addition, tax administrators and law enforcement
Bonn and Frankfurt, and staffed with financial industry agencies have embraced the concept of global cooperation
experts. The Task Force supports federal and state authori- and the active exchange of information to build domestic,
ties, including the Federal Central Tax Office (“BZSt”) foreign, and cross-border cases. U.S. taxpayers and their
and the Ministry of Finance, in handling complex and advisors need to tread carefully and consider that, when
sophisticated tax fraud investigations and prosecutions. addressing allegations of noncompliance, the U.S. may not
To this end, Task Force personnel aim to detect illicit be the only player in the room. It is important to understand
tax schemes and large-scale, complex frauds and serve as how information is shared among countries and the various
a central point of contact for all government authorities resources and programs that affected tax authorities can bring
that encounter possible tax schemes. As of July 2020, all to bear to protect their fiscal interests.

ENDNOTES
* Caroline D. Ciraolo is the former Acting Assistant 7 IrS-CI Annual reports 2013–2020, www.irs. 18 www.justice.gov/opa/pr/us-accountant-pan-
Attorney general of the U.S. Department of Justice’s gov/compliance/criminal-investigation/ ama-papers-investigation-sentenced-prison.
Tax Division. She is a founder of Kostelanetz & Fink’s irs-criminal-investigation-annual-reports. 19 www.justice.gov/opa/pr/founder-russian-bank-
washington, D.C. office. John D. Fort is the immediate 8 IrS-CI Annual report 2017, at 19. charged-tax-fraud.
past Chief of the Internal revenue Service’s Criminal 9 Id., at 22. 20 www.law360.com/articles/1280868/tax-dodg-
Investigation (CI) Division. 10 IrS-CI Annual report 2020, at 30. ing-atty-eyed-in-1b-ey-scheme-gets-3-years.
1 www.irs.gov/newsroom/irs-criminal-investiga- 11 Id., at 31. 21 www.justice.gov/opa/pr/ceo-multibillion-dollar-
tion-veteran-selected-as-new-fraud-enforce- 12 Id., at 28. software-company-indicted-decades-long-tax-
ment-director. 13 Id., at 29. evasion-and-wire-fraud.
2 IrS Criminal Investigation Annual report 2020 14 Id. 22 www.justice.gov/opa/pr/private-equity-ceo-
(“IrS-CI Annual report 2020”), p.7 (www.irs.gov/ 15 See www.irs.gov/pub/irs-utl/j5-media- enters-non-prosecution-agreement-interna-
pub/irs-pdf/p3583.pdf). release-6-5-2019.pdf. tional-tax-fraud-scheme-and-agrees.
3 Id., at Appendix, p. 132–135. 16 IrS-CI Annual report 2020, at 26. 23 www.agence-francaise-anticorruption.gouv.
4 IrS-CI Annual report 2020, p. 26. 17 www.irs.gov/newsroom/global-tax-chiefs- fr/files/files/EN_Lignes_directrices_CJIP_
5 Id. undertake-unprecedented-multi-country-day- revAFA%20Final%20(002).pdf.
6 Id., p. 24. of-action-to-tackle-international-tax-evasion.

58 JOURNAL OF TAX PRACTICE & PROCEDURE WINTER 2020