[ by Melanie Gretchen ] Some offshore banks that have been embroiled with the government over tax evasion charges, have of late enjoyed some unexpected slack from the Justice Department and its tax prosecutors.  That's because, in the past month, the Department has lost almost 30% of its tax prosecutors.  This has slowed the government's crackdown on offshore banks that facilitate tax evasion, according to four people familiar with the matter. Twenty-five of the 95 prosecutors in the tax division left Washington headquarters for 6-month "details" with U.S. attorneys around the country, while 3 others took permanent assignments. Swiss Among the Beneficiaries. Many of the departing lawyers had been handling cases involving foreign banks or financial advisers suspected of helping U.S. clients cheat on taxes.  Presently, there are at least 11 Swiss financial institutions, including Credit Suisse Group AG, that are the subject of criminal probes involving the tax division.

"To move one-third of these people from that effort will significantly compromise such enforcement at the very time it is needed to deal with the huge amounts of offshore cases coming to the tax division." -- Nathan Hochman, former assistant AG who oversaw tax division under Pres. George W. Bush;  now a partner at Bingham McCutchen.

What's at Stake. Besides tax evasion, the division investigates identify theft, illegal tax shelters, and other crimes, while approving every tax case filed by the 94 appointed U.S. attorneys serving the Justice Department around the country.  Since 2007, the offshore tax crackdown has extended to criminal charges against at least 21 foreign bankers, advisers and attorneys and at least 40 U.S. taxpayers.  Clients' banks have included UBS, Credit Suisse, HSBC Holdings Plc, and Wegelin & Co. The IRS said 30,000 U.S. taxpayers with offshore accounts have avoided prosecution since 2009 by entering a limited amnesty program, paying back taxes, and revealing who helped them hide their accounts from authorities.  Hundreds of taxpayers in the program gave prosecutors information that has helped build criminal cases against bankers and advisers.  [CI Note: We can only imagine 30,000 is a fraction of tax evaders.] Profit Loss. In addition to the loss of manpower, the shrinking of the Tax Division reduces the money coming back to the U.S. Treasury, tax attorney Scott D. Michel said.  "The Tax Division is one of the few parts of the U.S. government that probably makes a profit," said tax attorney Scott Michel with Caplin & Drysdale.  The prosecutors left under a program offered on 1/13/12 by the Justice Department, which said it would "detail" as many as 100 attorneys and support staff to the U.S. attorney’s offices through 9/30/12, or the end of the fiscal year. What Happened. The move was instigated to help the offices "address their short-term workforce needs resulting from the department’s ongoing hiring freeze," according to a memo by H. Marshall Jarrett of the Executive Office for U.S. Attorneys.  The U.S. attorneys weren’t obligated to hire prosecutors permanently, according to the memo, following March 20 hearing before the Senate Finance Committee’s economic growth and fiscal responsibility subcommittee, which examined identity theft and tax fraud. Another memo listed 155 attorney positions available around the country through the program.  Lawyers could help on cases involving narcotics, immigration, organized crime, child trafficking, and major frauds. Jeffrey Neiman, a former Justice Department prosecutor who worked on the UBS case, likened the transfers to getting rid of half a baseball team on the eve of the championship. "Between the government’s recent efforts to crack down on offshore tax evasion and the identity-theft epidemic plaguing the IRS, criminal tax enforcement is at a critical point." For further details, go to [Bloomberg, 3/27/12].