The Internal Revenue Service has recently hired 15,000 new Agents and has made international tax enforcement a priority. While the UBS scandal and the original Voluntary Disclosure program are behind us, many U.S. citizens and permanent residents continue to hold foreign bank and other financial accounts offshore without fulfilling their reporting requirements. At Dorot Law, P.A. we assist our clients in determining their exposure to prosecution and/or penalties and assist bringing them into compliance with the IRS. This process may be very lengthy and expensive, but may eliminate the possibility of criminal prosecution and a jail sentence. We recommend to all our clients to act immediately to cure their violations due to the harsh consequences should Federal Agents come knocking on their door.
BREAKING NEWS: IRS ANNOUNCES NEW AMNESTY PROGRAM
FEBRUARY 8, 2011. The IRS’s prior Offshore Voluntary Disclosure Program (2009 OVDP), which closed on October 15, 2009, demonstrated the value of a uniform penalty structure for taxpayers who came forward voluntarily and reported their previously undisclosed foreign accounts and assets. Not only did the initiative offer consistency and predictability to taxpayers in determining the amount of tax and penalties they faced, it also enabled the IRS to centralize the civil processing of offshore voluntary disclosures. Therefore, it was determined that a similar initiative should be available to the large number of taxpayers with offshore accounts and assets who applied to IRS Criminal Investigation’s traditional voluntary disclosure practice since the October 15 deadline. This new initiative, the 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI) will be available to those taxpayers and other similarly situated taxpayers who come forward and complete all requirements on or before August 31, 2011.
Useful Links
- 2011 Offshore Voluntary Disclosure Initiative
- 2011 Offshore Voluntary Disclosure Initiative Frequently Asked Questions and Answers
- Report of Foreign Bank and Financial Accounts (FBAR)
- FAQs Regarding Report of Foreign Bank and Financial Accounts (FBAR) – Filing Requirements
- FAQs Regarding Report of Foreign Bank and Financial Accounts (FBAR) – Financial Accounts
In the News and Relevant Publications
August 9, 2011. Is Foreign Account Ignorance Bliss? (Forbes). Should you enter the IRS’s OVDI program for foreign account disclosures if you didn’t intentionally violate the law? I’m asked this question frequently. For all the publicity surrounding the IRS foreign account amnesty that formally ends August 31, 2011, it is surprising that the public still views this amnesty as applying only to big time tax cheats. In some respects, that is not surprising. Consider the provenance of the OVDI program, emanating from the ashes of the UBS account scandals. Many taxpayers still think the only people who need to come forward are those who willfully stuffed money into Switzerland or other tax havens, usually money not previously taxed in the U.S. Yet the OVDI program does not distinguish between taxpayers who knew exactly what they were doing and those who had no idea they were violating the law. Whether you knew it or not…
August 4, 2011. IRS Amnesty: What’s Required By 8/31/11? (Forbes). Although August may not be a good time to be in Washington, DC, it’s a great time to get your tax affairs in order. The IRS offshore account program called OVDI ends August 31, 2011. Even so, you may be able to get an extension. 90-Day Reprieve. Taxpayers may request an extension if they can demonstrate a good faith attempt to comply by August 31st. The good faith attempt must include properly completed and signed agreements to extend the statute to assess tax (including tax penalties) and to assess FBAR penalties. Written extension requests must include a list of the items you’re missing, why they are not included, and the steps you’re taking to get them. Here’s the complete list of submission items…
August 4, 2011. Tick, Tock, Tax – IRS Amnesty Program’s August 31 Deadline Is Approaching Fast (San Francisco Chronicle). Set to expire on August 31, 2011, with no hint of another such program to come, the time is now to take advantage of the second IRS amnesty program -rumored to be the last. The strict requirements of the Foreign Bank Account Report (FBAR) must be adhered to by Americans with offshore accounts since foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. Navigating the complex waters of offshore account reporting can be overwhelming. Mistakes are costly if taxpayers don’t know how to report correctly. “FBAR compliance is a serious matter, and global banks are getting more pressure than ever to disclose U.S. accounts, so this is the time to get these matters settled…
August 3, 2011. More Tax Evasion News From Miami (South Florida Business Journal). When the feds announced new charges against a former UBS banker on Tuesday, I wasn’t surprised to see Miami in the news release. Martin Lack, a former UBS AG banker who is currently an independent asset manager, was charged with conspiracy to defraud the U.S. He allegedly encouraged U.S. citizens to evade taxes. Miami has been a hotbed for offshore tax evasion, and for concerns about disclosing those accounts. Lack was charged in Miami federal court. According to the indictment, Lack, a citizen and resident of Switzerland, assisted U.S. customers in opening secret bank accounts with a Swiss bank. He traveled to the U.S. and arranged meetings in a Miami hotel…
August 2, 2011. Tax Amnesty Goes Hollywood (Forbes). Taxpayers with undisclosed foreign accounts worry about entering the IRS’s Offshore Voluntary Disclosure Initiative (OVDI). But it’s not too late. The August 31 deadline is rapidly approaching, but an extension (until the end of November 2011) can provide time if you demonstrate a good faith attempt to produce all materials. Without the extension, August is the last month to collect foreign bank statements, amend tax returns and complete delinquent Treasury Forms TD F 90-22.1, also known as FBARs. State Disclosure Too. While focusing on the IRS is appropriate, there’s another tax regime to worry about: your state. California’s new program is called Voluntary Compliance Initiative 2 (VCI 2), since the state’s VCI 1 ran from January 1, 2004 to April 15, 2004…
August 2, 2011. US indicts ex-UBS banker for tax evasion services (Reuters).Aug 2 (Reuters) – A former senior UBS (UBSN.VX) private banker was indicted on Tuesday by federal prosecutors in Florida for selling offshore tax-evasion services to wealthy Americans. The former banker, Martin Lack, left UBS around 2003 to work at Keusch & Merlo Invest AG, a financial advisory firm in Zurich, according to court papers. He also ran a separate advisory business, Lack & Partner AG, in Zurich. Lack, a Swiss national who oversaw UBS’s North America business for wealthy Americans hiding money in secret offshore accounts, was charged with one count of conspiracy to defraud the United States. Lack shared business and office space with Renzo Gadola, a former senior UBS private banker who was indicted last December. Lack’s indictment said that he worked with an unnamed Swiss cantonal bank to help wealthy American clients of UBS further conceal their assets. That bank, federal officials said, is Basler Kantonalbank….
July 21, 2011. E-Filing And Other FBAR Quirks (Forbes). You may fear the IRS. But it is the Financial Crimes Enforcement Network—also known as FinCEN—that is responsible for FBAR (Report of Foreign Bank and Financial Accounts) filing and administration. FinCEN’s mission? To enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems. Up until now it has not been possible to e-file FBAR forms. Your 2010 FBAR was due June 30, 2011, so you may have just filed it. But if you are filing late–and oddly, there appears not to be a penalty for late filing–or considering next year, there’s good news that e-filing is now available. Currently, FinCEN can only accept FBAR e-filings when one signature is required. A spouse who is included as a joint owner and who does not file a separate FBAR must also sign. Unfortunately, the e-filing process will not yet allow for both signatures on the same electronic form. That means if you file an FBAR jointly with your spouse, you can’t e-file…
July 19, 2011. Credit Suisse In Justice Department Crosshairs (Forbes). Let’s see, first there was UBS. Then HSBC. Now it’s Credit Suisse’s turn with the IRS and federal prosecutors. Foreign financial institutions are probably all hoping they won’t join this elite list. In fact, it is frightening to think that this big Swiss bank could face criminal charges. As big an issue as this is, though, people who have been watching developments since the UBS case are hardly surprised. In fact, it’s been clear for some time that Credit Suisse has been dealing with this, including responding to U.S. requests for information, including subpoenas. Credit Suisse has the advantage of having watched the situation with UBS play out. UBS was a kind of unhappy pioneer. As with UBS, the investigation of Credit Suisse concerns historical private banking services provided on a cross-border basis to U.S. persons. As part of this process, on July 14, 2011, Credit Suisse received a letter notifying it that it is a target of the Justice Department investigation…
July 18, 2011. HSBC alerts U.S. clients to offshore tax evasion probe (USA Today). A major bank at the center of an expanded federal crackdown on wealthy Americans suspected of offshore tax evasion has told Indian-American clients to “be aware” of the IRS’ offer of lower penalties for those who voluntarily disclose secret overseas assets they hold. HSBC’s former head of services for Indians living outside their homeland recently wrote to the clients confirming that the London-based banking giant had received an IRS summons seeking the names of Americans who hold accounts at the bank. In the letter, a copy of which was obtained by USA TODAY, Sanjay Nair did not address whether HSBC plans to turn over the information. But he urged Indian-American clients to consult with a U.S. tax adviser “if you have any concerns about your U.S. tax reporting relating to your HSBC India account(s).” “You may wish to be aware of an IRS voluntary disclosure program, which encourages U.S. taxpayers to bring themselves voluntarily into compliance with the U.S. tax laws,” Nair added, referring to an offer set to expire Aug. 31….
July 16, 2011 Credit Suisse Is ‘Target’ of Inquiry (Wall Street Journal). U.S. prosecutors are ratcheting up the pressure on Credit Suisse Group AG as part of an escalating tax-evasion probe. The move significantly raises the stakes for Zurich-based Credit Suisse, one of the world’s largest banks, because “targets” of criminal probes are those under direct scrutiny from grand juries that consider whether to hand up indictments. No major U.S. bank has ever survived criminal charges. The government’s move could accelerate settlement talks between the U.S. and Swiss governments that could cap an historic chapter in secretive Swiss banking, according to people familiar with the matter. The discussions are aimed at ending a sprawling inquiry into Swiss private banking that already has forced UBS AG to turn over client information and pay a fine….
July 15, 2011. Lawyer Indicted, Data Breaches, Tax Evasion: Compliance (Bloomberg Online). Theodore L. Freedman, a former bankruptcy partner with the international law firm Kirkland & Ellis LLP, was indicted yesterday for understating his income by $2.1 million from 2001 to 2004. Prosecutors charged Freedman, 63, with four counts of filing false tax returns and allege that Freedman avoided paying $1 million in federal taxes by falsely claiming he had sustained losses as the sole proprietor of a law practice in Dutchess County, New York. At the time, Freedman was a partner at Kirkland & Ellis, according to papers he filed on behalf of clients in U.S. Bankruptcy Court. Freedman actually made $5.4 million from the firm during those years, according to the indictment which federal prosecutors in New York released yesterday. Freedman faces as many as 12 years in prison if convicted. “Mr. Freedman resigned from the firm in October 2010,” Kate Slaasted, a Kirkland & Ellis spokeswoman, said in a statement. “We understand that the federal indictment relates exclusively to Mr. Freedman’s personal conduct. Accordingly, the firm will not comment on the matter.” Freedman didn’t immediately return a voice-mail message left at his home….
July 15, 2011. Please Sir, Can I Have Some More FATCA? (Forbes). Americans may be too fat, but it’s foreign financial institutions (FFIs) that are hoping to shed pounds of IRS disclosure and tax withholding problems. Why are FFIs FATCA haters? FATCA puts new filing and disclosure obligations on Americans, but imposes direct and controversial enforcement mechanisms on FFIs—whether or not they have connections with the U.S. FATCA Hitting the Fan. Foreign banks are required to report—directly to the IRS—all their U.S. account holders starting in 2013. Many banks and foreign governments are lobbying for a repeal of this provision. After identifying U.S. account holders, the institutions must impose a 30% tax on payments or transfers to account holders who refuse to identify themselves. To soften the blow, the IRS issued Notice 2011-53, phasing in the law. FFIs and U.S. withholding agents are given extra time listed below to implement systems to comply…
July 14, 2011. Greendale Neurosurgeon Pleads Not Guilty to Tax Fraud Involving $8 Million (GreendalePatch). A Greendale neurosurgeon pleaded not guilty to a federal grand jury on allegations of tax fraud for failing to report $8.7 million in income that he allegedly hid in a bank account in India. Arvind Ahuja appeared today in federal court in Milwaukee, reports Bloomberg. He was indicted on June 28 on four counts of willfully filing materially false tax returns and four counts of failing to file Reports of Foreign Bank and Financial Accounts (FBARs). Ahuja, a board-certified neurosurgeon, allegedly wire transferred and maintained millions of dollars in bank accounts in India and the Bailiwick of Jersey at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC) and allegedly failed to report these accounts to the IRS on his 2006-2009 tax returns. The HSBC bank account in India had a balance of $8,733,785 in 2009. Ahuja also allegedly failed to report more than $1.2 million in interest income that he earned from his HSBC India account and failed to pay the taxes due on that income, according to the indictment…
July 14, 2011. HSBC Client Pleads Not Guilty to Filing False Returns to Tax Authorities (Bloomberg Online). A Wisconsin neurosurgeon pleaded not guilty to U.S. charges accusing him of filing false tax returns that failed to declare an HSBC Holdings Plc (HSBA) account in India once valued at $8.7 million. Arvind Ahuja appeared today in federal court in Milwaukee, where he was indicted June 28 as part of a U.S. crackdown on offshore tax evasion. U.S. Magistrate Judge Nancy Joseph released him on a $5,000 cash bond, saying he needs court permission to travel in the U.S. outside of eastern Wisconsin. Ahuja is accused of filing false tax returns from 2006 to 2009 and of failing to file Reports of Foreign Bank and Financial Accounts, or FBARs, for the same period. Prosecutors said he failed to report more than $1.2 million in interest income and pay taxes on those earnings. The case is based on a “tenuous factual basis,” Dan K. Webb, Ahuja’s attorney, said in an interview after the hearing. He said HSBC didn’t give his client 1099 forms about his interest income. Ahuja has one of the most prosperous neurosurgery practices in the Midwest and made full payments to the Internal Revenue Service when he learned of his mistake, Webb said…
July 12, 2011. Senate Bill Seeks To Raise Revenue By Closing Tax Havens (New York Times). With officials in Washington struggling over a deal to cut the nation’s deficit, two senior Senate Democrats on Tuesday urged the federal government to focus on the billions of dollars in revenue lost to offshore tax havens. A bill introduced by Carl Levin of Michigan and Kent Conrad of North Dakota would tighten rules that allow hedge funds and corporations in the United States to skirt federal taxes by opening shell companies overseas. The measure would also change the I.R.S. regulations that allow traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. And to help tax collectors track down hidden assets overseas, the proposal would empower the Treasury Department to ban any foreign bank that refused to cooperate with the I.R.S. By closing the loopholes, the plan could bring the Treasury as much as $100 billion a year, according to various estimates cited by Mr. Levin…
July 11, 2011. It’s Not Too Late For IRS Amnesty (Forbes). It’s not too late to enter the IRS 2011 Offshore Voluntary Disclosure Initiative (or OVDI). The program runs through August 31, 2011, offering what IRS Commissioner Shulman called the “last, best chance” to come clean. The IRS’s 2009 offshore disclosure program netted about 15,000 taxpayers. Since then, 3,000 more came in under the IRS’s one-off system of voluntary disclosure. Who? First, you must report worldwide income, even earnings taxed abroad. If you have foreign bank accounts with an aggregate balance of more than $10,000 at any time during the year, you must check the “yes” box on your IRS Form 1040 disclosing it. Plus, you must file an FBAR annually (Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts). You could hope you’re never discovered…
July 8, 2011. Annual Filing of Foreign Bank Account Reports for U.S. Taxpayers (China Briefing). U.S. taxpayers holding financial interest or other authority over a financial account in a foreign country amounting to more than US$10,000 are required to file the annual Foreign Bank Account Report (FBAR) by June 30th of the following year. The FBAR is not a tax return, but a report filed with the Treasury Secretary indicating the taxpayer’s interest in a foreign account. In 2008, FBAR rules were expanded to apply the filing requirements to persons in and doing business in the United States. This potentially includes non-resident foreigners working in the United States and has signing or other authority over foreign financial accounts…
July 8, 2011. U.S. Nationals and FBAR – First American Indicted (China Briefing). First American national indicted, faces 10 years prison and US$500,000 in fines. As we advised last week, U.S. nationals operating bank accounts overseas – including accounts for representative offices, WFOEs or other businesses in China – must have completed the new FBAR filings to the U.S. Internal Revenue Service (IRS). Due at the end of last month, U.S. executives that missed this deadline may still be able to make a voluntary disclosure under the IRS’s Offshore Voluntary Disclosure Initiative (OVDI) and avoid or decrease penalties. The OVDI is open until August 31, 2011 and certain individuals may be entitled to an extension. The situation has become critical for overseas Americans as we learn of the first U.S. national to be indicted. An American client of HSBC India has been charged with four counts of failure to file a Foreign Bank Account Report, form TD F 90-22.1 (FBAR). The full story is featured on our India Briefing web site here. The charges are the first signs that the IRS is getting very serious about FBAR filings and intends to take a zero tolerance approach to non-compliance. U.S. executives operating bank accounts in China or elsewhere are advised to take immediate action to get into compliance. Details of the filing procedures, complete with downloadable forms, were made available by us on China Briefing here. We recommend such executives seek immediate advice in the United States to get into compliance.
July 8, 2011. Some Foreign Account Penalties Unfair, Says Taxpayer Advocate (Forbes). With the deadline for FBAR filings now past—the ubiquitous forms were due June 30th—some people are no longer as worried over the do-or-die situation. Should You File FBAR For The First Time? An FBAR, or Report of Foreign Bank and Financial Accounts, Treasury Form TD F 90-22.1, is part of the compliance required of U.S. citizens and permanent residents. It’s a three part obligation: Report All Your Worldwide Income. Your U.S. tax return must report it all, even if you pay tax elsewhere. Check the Foreign Account Box on Schedule B to Your 1040. If you have $10,000 or more, disclose that you have foreign accounts on your tax return. File an FBAR Annually. If you have $10,000 or more, file an FBAR annually…
July 6, 2011. IRS May Find “Innocent” FBAR Violation Willful (Forbes). To the IRS, foreign account compliance is a major enforcement effort. The IRS 2011 Offshore Voluntary Disclosure Initiative offers what IRS Commissioner Shulman called the “last, best chance” to come clean. Many U.S. taxpayers—even with professional tax advisers—neglected to answer a pivotal question on Form 1040 Schedule B: do you have a foreign bank account, yes or no? Some ignored the question or inaccurately checked “no.” Even those answering “yes” may not have filed an annual FBAR (Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts). Regardless of amounts, you must report all your income—even foreign interest. Plus, if you have one or more foreign accounts containing more than $10,000 in the aggregate, you must…
June 30, 2011. Understand FATCA: Taxing Americans living abroad (The Jerusalem Post). Chairwoman, director of Switzerland-based US Tax and Financial Services sits with ‘Post’ discuss what the new regulations mean for American Israelis. Among the economic reforms introduced by the administration of US President Barack Obama in the aftermath of the global financial crisis, one particular piece of legislation will have a wide-reaching effect on millions of American living abroad. FATCA, the Foreign Account Tax Compliance Act, passed into law in March 2010 as part of the HIRE Act and is set for implementation on January 1, 2013. It will give the United States more power than ever before to force Americans residing outside the US to become tax compliant. As of 2009, about 93 percent of nonresident Americans did not file US tax returns, according to government estimates, but this is something the current administration intends to change. Israel has one of the highest concentrations of Americans in the world, with the US Consulate in Tel Aviv saying it is aware of 137,000 of its citizens living here (within the Green Line), although it estimates the actual figure is somewhere between 200,000 and 300,000…
June 29, 2011. India’s silence on US tax evasion cases says it all (MoneyLife). The US is exerting more pressure on banks to cooperate with the authorities in tax evasion cases. While the Indian authorities knew about possible tax evasion in the money being remitted from abroad, they have kept silent fearing backlash from NRIs and PIOs. In yet another tax evasion case, the US justice department has indicted an Indian and a client of Hong Kong and Shanghai Banking Corp (HSBC) for hiding more than $8.7 million in offshore accounts and filing false income-tax returns. While the number of tax evasion cases are going up on the continuous pressure from the US authorities, there is complete silence from the Indian authorities. According to a senior banker, who requested anonymity, everyone knows that a lot of money coming into India from non-resident Indians (NRIs) or from persons of Indian origin (PIOs) may not be accounted for tax purposes in the country of origin. However, the moment the Indian government initiates any action in this matter, the remittances from NRIs and PIOs would drop dramatically. This may be one reason, why the country is not too keen on signing any international treaties on tax evasion, the banker said….
June 29, 2011. Indian-Americans seek review of FBAR rules (The Hindu Business Line). Washington, June 29: The Global Organization of People of Indian Origin (GOPIO) has requested the Treasury Secretary, Mr Timothy Geithner, to review the US’ Foreign Bank and Financial Accounts (FBAR) rules. In its request, GOPIO said the recent decision of the US Internal Revenue Services (IRS) to impose 20 per cent penalty on undeclared taxes and a 25 per cent FBAR penalty on the highest balance between 2003 and 2010 is causing inconvenience to Indian-Americans. “Many people holding foreign bank accounts were unaware of these rules simply because these rules were never publicised by the IRS to the general public,” the New York-based GOPIO wrote in a letter to Mr Geithner. On February 8, the IRS had announced a new Voluntary Disclosure Program, which is a tax amnesty scheme for those holding income in foreign countries. The law requires that anyone who is a US citizen or a permanent resident to disclose his or her foreign income. In the tax amnesty Voluntary Disclosure Program, one has to declare the interest and rental income of the last eight years that is from 2003-2010. The IRS has declared 20 per cent accuracy penalty on undeclared taxes and a 25 per cent Foreign Bank and Financial Accounts (FBAR) penalty on the highest balance between 2003 and 2010. GOPIO asserted there was no deliberate intention by Indian-Americans to avoid taxes on the interest earned during the process of acquiring home, apartment, supporting family or children’s education. It urged the IRS to review and reconsider the rules towards more practical and prudent application. “We believe that universal application of the law should be on an equitable basis, on principle of fairness and in good conscience without undue burden to the US taxpayer….
June 18, 2011. Potential trouble spots as IRS steps up enforcement (Washington Post). The Internal Revenue Service has added a couple of notches to its enforcement belt. First came the disclosure that international financial services giant Credit Suisse is under federal investigation for helping U.S. citizens avoid taxes using foreign accounts. Then came multi-platinum rapper Ja Rule’s conviction for failing to pay taxes on $3 million in earnings. He was sentenced to 28 months in prison. Gulp….
June 6, 2011. IRS Update Voluntary Disclosure Amnesty: What You Should Know (Forbes). The IRS has outdone itself with a helpful and liberal document that’s good news for many taxpayers currently wringing their hands over the looming August 31, 2011 deadline. That’s the deadline to comply with offshore account disclosures. The IRS has even gone so far as to say you can have up to an extra 90 days—up until November 30, 2011 to get all your amended tax returns, FBAR forms (Treasury Form TD F 90-22.1), and account information to the Austin Campus—yes, IRS Service Centers are “Campuses” now—which sounds quite collegiate. But don’t just put off dealing with these issues—that’s not how the extension works. 90-day Reprieve. Taxpayers may request an extension to complete their submission if they can demonstrate a good faith attempt to fully comply, on or before August 31, 2011, with the information disclosure required under the 2011 OVDI…
June 3, 2011. Handling New IRS Foreign Reporting Requirements Without Doing Jail Time (Forbes). If you have unreported foreign accounts of more than $10,000 and unreported income, you better come clean with the IRS or you could be in a heap of tax trouble, the type that can cost you hundreds of thousands of dollars and even land you in jail. While trading has gone global, the IRS is becoming xenophobic over reporting foreign income and accounts. Americans are trading different types of instruments all around the world. Some trade from U.S. brokerage and bank accounts, but others trade directly through foreign brokers and banks. The U.S. taxes all income, which means it taxes foreign accounts too. The IRS is getting very tough on so-called “tax cheats,” — U.S. taxpayers hiding income and assets in offshore accounts…
June 3, 2011. IRS To Let Some Bow Out Of Swiss Account Disclosure Program (Wall Street Journal). The Internal Revenue Service issued guidelines this week to help U.S. citizens living overseas report their foreign bank accounts, and offered some taxpayers more time to get into a special program for confessing about accounts they kept secret. An Aug. 31 deadline to enter a voluntary disclosure program has been extended by as much as 90 days for some taxpayers, the IRS said. Thousands of people stepped forward in 2009 under an earlier special penalty deal offered in the program, hoping for leniency from the IRS, which has been cracking down hard on use of secret accounts in Switzerland…
May 31, 2011. New Focus On Business Owners’ Foreign Accounts (Bloomberg). A recently amended federal rule issued by the Financial Crimes Enforcement Network, a division of the U.S. Treasury, has immigrant small business owners scrambling to learn a new acronym: FBAR. The Report of Foreign Bank and Financial Accounts mandates that U.S.citizens, U.S.residents, business partnerships, trusts, and corporations disclose financial interest or signatory authority in any foreign financial accounts that exceed $10,000. Although FBAR requirements have been around for decades, revisions published in February and heightened enforcement are prompting immigrant entrepreneurs to take the rules more seriously…
May 26, 2011. Are You Getting Enough FBAR? (Forbes). As consumers we may be bombarded with how much fiber we need. Yet FBARS may be more important than fiber! The Report of Foreign Bank and Financial Accounts, also known as an FBAR or as Treasury Form TD F 90-22.1, has come out of the dusty stacks of federal form oblivion and into the front and center consciousness of thousands with bank accounts in foreign countries. 1. Annual Filing Required. Unless you fall within the “at no time exceeding $10,000 category”–meaning all your foreign accounts in the aggregate did not exceed $10,000–you generally must file every year. 2. Separate June 30 Filing. FBARs are filed separate from tax returns. They are due each June 30 for the preceding year…
May 23, 2011. Offshore Tax Crackdown Scorecard: UBS, Credit Suisse, HSBC (Bloomberg). The U.S. extended its crackdown on offshore tax evasion last week, charging Michael F. Schiavo, a managing director at SCG Consulting Group in Boston, with failing to report his offshore account at HSBC Holdings Plc (HSBA) to U.S. authorities. Schiavo didn’t file a Report of Foreign Bank and Financial Accounts form, or FBAR, for an account at HSBC Bank Bermuda, prosecutors said. Schiavo agreed to plead guilty in federal court in Boston. Schiavo’s firm serves the venture capital and private-equity industries. He also is a director at Boston Private Bank and Trust Co., a Boston-based commercial bank. The crackdown has led to criminal charges against UBS, the largest Swiss bank, at least two dozen former UBS clients, four former UBS bankers, and five bankers at Credit Suisse Group AG (CSGN), Switzerland’s second-largest bank. Three former clients of HSBC Plc, Europe’s biggest bank, have been charged…
May 23, 2011. Latest Foreign Account Prosecution Fuels Fears (Forbes). If you are fence-sitting and can’t decide whether to disclose your past foreign account noncompliance to the IRS, the latest press release from the Justice Department and the IRS might just give you the necessary shove. According to the criminal information and plea agreement, Michael Schiavo, 53, of Westford, Mass., held an account in his name at HSBC Bank Bermuda from 2003 to 2008. In 2006, about $100,000 went from a partner’s account at UBS in Switzerland to HSBC Bank Bermuda. Schiavo confessed that he knew this payment was taxable income, but he deliberately chose not to report it. The same was true of the interest income that accrued in the HSBC Bank Bermuda account. Schiavo shortchanged the IRS to the tune of $40,624 in taxes. Observers are struck by the relatively small amounts of income and tax involved and the small size of the account. It ranged from about $65,000 to $150,000. But even more striking was the nature of the disclosure Schiavo made and how the government reacted to it…
May 13, 2011. U.S. Tax Laws Change The Rules Of The Game (Forbes). Most advanced economies have tax evasion problems just as significant as those in the U.S., and it may be only a matter of time before other major countries begin to adopt similar legislation for offshore compliance regimes. In March 2010, U.S. President Barack Obama and Congress enacted a game-changing piece of extraterritorial legislation–the Foreign Account Tax Compliance Act (FATCA)–as part of increasing efforts to reduce offshore tax abuses by U.S. citizens and residents. When Obama’s pen added Sections 1471 through 1474 to the Internal Revenue Code, financial executives could be forgiven for ignoring yet another addition to America’s enormous and arcane body of tax law. But it is more than that; FATCA is an extra-territorial regulatory regime that enlists non-U.S. “financial institutions” in the tax collection efforts of the U.S. government…
May 13, 2011. IRS Denies Outside Influence Sparked Gift Tax Investigations (Bloomberg). The Internal Revenue Service says the agency wasn’t pressured into investigating whether a levy on gifts should be applied to some contributions to political advocacy groups. The IRS said in a statement that it is examining contributions from five taxpayers to determine whether they should pay the gift tax on donations to the groups, which are organized as 501(c)(4) organizations. The IRS didn’t identify the donors it is investigating or the groups. “The examinations were started by employees of the Estate and Gift Tax Unit at the IRS as part of their increased efforts in the area of non-filing of gift and estate tax returns,” IRS spokeswoman Michelle Eldridge said in the statement. “All of the decisions involving these cases were made by career civil servants without any influence from anyone outside the IRS.” The 501(c)(4) entities are known as social-welfare organizations, and have been used by political advocacy groups in recent election cycles. Eldridge said the examinations aren’t aimed at all of these groups. “These examinations are not part of a broader effort looking at donations to 501(c)(4)s,” she said…
April 30, 2011. Sacre Bleu! The Foreign-Account Penalty (Wall Street Journal). Tax season may be over, but FBAR season is here. That ugly, universally used acronym stands for “Foreign Bank Account Report.” It refers to an odd but crucial June filing for U.S. taxpayers with one or more “foreign financial” accounts, which can include not only bank accounts but overseas life-insurance policies and nonbank accounts. Nonfilers ignore this form at their peril. “It can be more dangerous not to file an FBAR than not to file a tax return,” says Andy Mattson, an accountant with Mohler, Nixon & Williams in Campbell, Calif. It’s purely an information return, but FBAR penalties are among the most severe in the tax system: $100,000, or half the value of the account, per year, for willful failure to file. The FBAR is one element of a concerted push by Congress and the Internal Revenue Service to make sure U.S. taxpayers are paying what they owe on foreign accounts. Unlike other countries, Uncle Sam taxes citizens and residents on world-wide income…
April 24, 2011. IRS Issues Final FBAR Regulations And Revised FBAR Form (Forbes). As previously blogged by Chuck Rettig (2/9/11), Kathy Keneally (12/12/10) and Bob McKenzie (10/01/10), the IRS has been aggressively pursuing the disclosure of foreign financial information by U.S. citizens and residents. Effective March 28, 2011, the Department of the Treasury, on behalf of the Financial Crimes Enforcement Network (“FinCEN”), issued final regulations (the “Reporting Regulations”) amending Bank Secrecy Act (“BSA”) regulations with respect to reporting of foreign financial accounts by U.S. citizens and residents. In conjunction with issuance of the Reporting Regulations, the Treasury also issued a revised Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”), together with new instructions. Finally, IRS issued Notice 2011-31 describing additional reporting matters for filing FBARs. Who Must File FBARs? An FBAR must be filed by a “United States Person” that has a financial interest in or signature authority over foreign financial accounts where the aggregate value of those accounts exceeds $10,000 at any time during the calendar year…
April 22, 2011. Former UBS Client Vogliano Sentenced To 2 Years Probation (San Francisco Chronicle). Former UBS AG client Ernest Vogliano was sentenced to two years probation for filing false income taxes and conspiring to defraud the Internal Revenue Service by hiding $4.9 million at the bank in Switzerland. Vogliano, 80, was one of seven U.S. taxpayers charged on April 15, 2010, with filing false tax returns and related counts for hiding Swiss bank accounts from the IRS. He was sentenced today by U.S. District Judge Thomas P. Greisa in New York, the U.S. Attorney’s Office in Manhattan said in a statement. Vogliano pleaded guilty in December to five counts of filing false federal income tax returns and conspiracy to defraud the IRS. Five of the seven defendants, including Vogliano, have pleaded guilty. UBS admitted in 2009 that it helped thousands of Americans evade taxes, avoided U.S. prosecution by paying $780 million and gave the Internal Revenue Service data on accounts. Vogliano paid a civil penalty of $940,381 as part of his plea agreement, or an amount equal to 50 percent of the total value of his unreported foreign accounts as of Dec. 31, 2004, prosecutors said in the statement…
April 19, 2011. How To Open And Access An Offshore Bank Account (Forbes). Offshore banking is often associated with a high level of financial sophistication. However, the reality is that the average person can open an offshore bank account with just a few hours of work. Each offshore bank and foreign jurisdiction has its own requirements, so you’ll have to do some research to find the specifics relevant to your situation. The following is an overview of what you can expect, based on common offshore banking centers such as Switzerland, the Cayman Islands and the Channel Islands…
April 13, 2011. Examining The IRS’ New Voluntary Disclosure Program (Forbes). This program makes significant changes from the 2009 Voluntary Disclosure Program (“2009 VDP”). By offering the possibility of reduced penalties for inherited accounts and foreign resident U.S. citizens, the 2011 VDP brings its own set of opportunities and challenges for dual citizens. Changes from the 2009 Voluntary Disclosure Program. The IRS implemented the 2009 VDP from March 23 to October 15, 2009. The 2011 differs significantly from this program in three key aspects: 1. Years Applicable. While the 2009 VDP required taxpayers to correct their non-compliance during the six-year period of 2003-2008, the 2011 VDP will require taxpayers to do the same during the eight-year period of 2003-2011. Of course, if a taxpayer’s noncompliance spans a time period shorter than these eight years, only those years with noncompliance must be addressed…
April 13, 2011. “Quiet” Foreign Account Disclosure Not Enough (Forbes). The IRS has made it clear that foreign account compliance is one of its major initiatives. Its current foray into foreign bank account disclosure was announced February 8, 2011. The 2011 Offshore Voluntary Disclosure Initiative offers what IRS Commissioner Shulman called the “last, best chance” to come clean. In the past, many U.S. taxpayers familiar with Form 1040 didn’t focus on this issue. They, and in many cases even their professional tax advisers, may have entirely neglected to answer the question on Schedule B. It asks–yes or no–whether they had any foreign bank accounts. Alternatively, they may have inaccurately answered “no.” Even if they ignored or fudged on that question, many did not file an FBAR (Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts) annually. Provided you have more than $10,000 in a foreign account, the FBAR is a separate detailed disclosure that must be completed detailing where and how much you have in foreign banks…
April 8, 2011. US Moves For Force HSBC To Name Secret Account Holders In India (Wall Street Journal Australia). The move opens up a new front in the US crackdown on tax evasion and comes days before the April deadline for taxpayers to file individual returns. Previous cases focused on Americans with Swiss bank accounts. In court documents, the Justice Department said HSBC bankers told prospective clients that, as a foreign bank, HSBC’s India operations wouldn’t disclose their accounts to the Internal Revenue Service. Armed with that knowledge, US customers “have been able to maintain these foreign accounts with reasonable confidence that the IRS would not discover them,” government lawyers alleged. Thousands of US taxpayers of Indian origin have opened up accounts with HSBC in India since 2002, when the bank allegedly began soliciting their business, according to the US government. It asked a San Francisco court to allow the IRS to serve a so-called John Doe summons against the UK bank’s US unit, HSBC USA, to get the names of its US clients with Indian accounts…
April 8, 2011. HSBC Comes Under US Tax Scrutiny Over Indian Accounts (BBC). US authorities are taking first steps towards an investigation into HSBC’s alleged role in enabling tax evasion. The Department of Justice has asked a federal court to allow US tax authorities to demand personal account details of US taxpayers from the UK bank’s Indian subsidiary. HSBC said it had not seen the summons but did not condone tax evasion. The investigation will focus on Indians living in the US, who have to pay US income tax on their worldwide income. ‘Wider effort’. The Department claims that HSBC India encouraged these non-resident Indians to set up accounts in India, which were then concealed from the Internal Revenue Service (IRS) in order to avoid paying income tax on the interest earned. “Prospective clients were told that, as a foreign bank, HSBC India would not disclose the accounts to the IRS,” said the Department in a statement on its website…
April 7, 2011. 4th Update: Justice Department Seeks Names of US Clients of HSBC India (Capital.gr). The U.S. Department of Justice on Thursday asked a federal court to force HSBC India to reveal the names of U.S. customers suspected of hiding their accounts to evade taxes. The bank helped U.S. taxpayers keep the accounts secret, the department alleged. It asked a San Francisco court to allow the Internal Revenue Service to serve a so-called “John Doe” summons against the bank that seeks the U.S. client names. The U.S. government believes “many” of those clients haven’t declared their accounts to U.S. tax authorities, the Justice Department said. The department said in court documents that thousands of U.S. taxpayers of Indian origin have opened up accounts with HSBC India since 2002, when the bank allegedly began soliciting their business. Bankers told prospective clients that as a foreign bank, HSBC India wouldn’t disclose their accounts to the IRS, the department alleged…
April 6, 2011. US Residents Urged To File Bank Reports (Bermuda Sun). The US Consulate is reminding American citizens to report foreign bank and financial accounts of more than $10,000. US citizens and residents abroad with an overseas financial account — such as a bank account, brokerage account or mutual fund – may have to report the account annually to the Treasury. Under the Bank Secrecy Act, each US person must file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if: The person has a financial interest in, or signature authority (or other authority that is comparable to signature authority) over one or more accounts in a foreign country; The aggregate value of all foreign accounts exceeds $10,000 at any time during the calendar year…
April 4, 2011. Don’t Underestimate IRS’s New Foreign Tax Rules (Miami Herald). Taxpayers who have not accurately reported and paid taxes on international business structures, foreign financial accounts, holdings and properties are at greater risk than ever of fines and prosecution. For U.S. taxpayers living or doing business abroad, Uncle Sam can be the shadowy figure of nightmares, lurking behind doors, ready to pounce, potentially subjecting them to criminal prosecution. At stake for the federal government is an estimated $345 billion in tax revenues lost each year as a result of offshore taxes from hidden or unreported accounts held by U.S. taxpayers or foreign entities they control. Each year, the IRS attempts to close the gap further, increasing numbers of agents and funding for the effort. However, in March 2010, President Obama signed what is arguably the toughest law yet — the Foreign Account Tax Compliance Act (FATCA) provisions included in the Hiring Incentives to Restore Employment Act or HIRE…
April 1, 2011. IRS’s New Undisclosed Offshore Account Program Brings In Taxpayers (Digital Journal). The Internal Revenue Service and the Department of Justice are continuing to investigate offshore accounts by utilizing information gained through taxpayers who have come forward through the Voluntary Disclosure or Amnesty Programs. However, those who were sought by government officials and did not voluntarily disclose their offshore accounts have suffered greater civil and criminal penalties. On March 14, 2011, the Department of Justice reported that another offshore account holder, Jeffry Chatfield, was charged for failure to file his FBARs and report his interest in his Bahamian accounts. Mr. Chatfield was sentenced to 3 years of probation. The case moved to the civil side, in which Mr. Chatfield was ordered to pay over $96,000 in FBAR penalties to resolve his civil liabilities; this does not include the delinquent income tax, interest, and accuracy penalty that was also owed…
March 30, 2011. Offshore Tax Crimes Scorecard: Bankers, Clients At UBS (Bloomberg). The U.S. extended its crackdown on offshore tax evasion, charging former UBS AG (UBSN) banker Renzo Gadola with helping American clients hide assets from the Internal Revenue Service by shifting them to a smaller Swiss bank. Gadola, 44, was accused yesterday of conspiring with a Swiss banker to encourage U.S. clients who hadn’t told the IRS about their UBS accounts to open undeclared accounts at Basler Kantonalbank. Gadola and the banker told clients not to join a voluntary disclosure program that led 18,000 Americans to declare offshore accounts to the IRS, prosecutors said. The crackdown has led to criminal charges against UBS, the largest Swiss bank, two dozen former clients, four former bankers and two advisers…
March 28, 2011. Beware Foreign Trust Reporting To IRS (Forbes). The Foreign Account Tax Compliance Act–the unfortunate acronym is FATCA–adds another filing requirement for foreign accounts and assets. You already know about disclosing a foreign account on your tax return, reporting the income, and separately filing a Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts–referred to as an FBAR–annually. Distinct from tax returns, FBARs are due each June 30 for the preceding year. See Ten Things To Know About Offshore Bank Accounts. But the newest disclosure for foreign trusts will be a different kettle of fish entirely. Unlike the FBAR form, this one is to be attached to your Form 1040 tax return. This new rule does not obviate the FBAR…
March 25, 2011. Taxman Chases Overseas Americans And Their Bankers (Asia Times Online). The United States government believes that Americans abroad avoid billions of dollars in taxes and it’s trying to collect. America’s Internal Revenue Service (IRS) – apparently misnamed since it’s going after citizens’ external revenue – has imposed a raft of new reporting rules on US expatriates and aims to enlist foreign financial institutions in its effort to narrow the US deficit. The IRS estimates that will collect more than US$165 billion in additional taxes from Americans overseas over the next decade through the new Foreign Account Tax Compliance Act (FATCA) and enforcement of the Foreign Bank Account Reporting (FBAR) requirement. Critics question both the IRS’s focus and its math. “The perspective from the IRS is that they are uncovering wealthy…
March 25, 2011. Swiss Bank Account? Better Report It Now (Christian Science Monitor). The IRS has made an offer to Americans with unreported offshore accounts: Turn yourself in, and you won’t face possible time in jail or fines as high as usual. The partial amnesty program started in February, and the offer extends to Aug. 31, 2011. Normally, if somebody volunteers to come forward with an undisclosed account, the penalty will be less severe than if they’re nabbed. This program makes that penalty even lighter, though IRS Commissioner Doug Shulman says it’s “a steep price.” The IRS made a similar “last chance” offer two years ago, but they say this time really is the final chance to come clean for such a mild penalty. The 2009 program had lower fines than this year’s: 15,000 Americans reported previously undisclosed foreign accounts…
March 25, 2011. IRS On What Is A Foreign Account (Forbes). If you have a foreign bank account with $10,000 or more at any point during the year, you need to file a report annually. File a Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts–referred to as an FBAR. Separate from tax returns, FBARs are due each June 30 for the preceding year. See Ten Things To Know About Offshore Bank Accounts. Of course, you must report any income from the account (along with the rest of your worldwide income) on your tax return, and check the “yes” box on Schedule B that you have a foreign account. But the FBAR disclosure is the detailed one. And penalties for failure to comply are distinct from the penalties for an incomplete tax return. FBAR penalties can be extreme: prison for up to ten years and up to $500,000 for each FBAR failure. FBAR rules have long been in the law–the Bank Secrecy Act dates to 1970...
March 24, 2011. New IRS Amnesty Offer For Offshore Accounts (EIN News). The IRS has announced an amnesty program in which holders of offshore bank accounts have until August 31 to voluntarily report the accounts and avoid tax evasion charges. Americans who have not disclosed large sums of money in foreign offshore accounts have a second chance at tax amnesty. The Internal Revenue Service is giving taxpayers with foreign bank accounts until August 31 to voluntarily report the accounts and income and avoid tax evasion charges. In exchange, these taxpayers would pay penalties that are lower than what the IRS would usually charge. Although these penalties are higher than those offered during a previous tax amnesty in 2009, the avoidance of prosecution remains a major incentive for a taxpayer to take the deal. The IRS offered this amnesty program after a previous effort proved to be so successful. The earlier amnesty drew responses from roughly 15,000 people — far more than the agency’s original estimate of 1,000 — and earned more than $400 million…
March 23, 2011. IRS Continues To Indict Undisclosed Offshore Account Holders (Benzinga). With the launch of the 2011 Offshore Voluntary Disclosure Initiative (“OVDI”), the Internal Revenue Service and the Department of Justice have been taking strides to move forward with all undisclosed offshore account cases. According to Kevin E. Thorn, Managing Partner of Thorn Law Group, a law firm that represents taxpayers throughout the U.S. and around the world with undisclosed offshore accounts, “Over the next few months, I expect the government to indict other taxpayers with undisclosed offshore bank accounts at UBS and other international banks around the world. This is only the beginning.” According to the Department of Justice, on December 17, 2010, another undisclosed UBS account holder, Arthur Joel Eisenberg, pled guilty in a federal court in Seattle, Washington…
March 23, 2011. United States: FBAR Update For Employee Benefit Plans: FinCEN Publishes Final Rule Addressing Reports Of Foreign Financial Accounts (Mondaq). The Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) recently released final regulations (the “Final Regulations”) under the Bank Secrecy Act concerning the Report of Foreign Bank and Financial Accounts (or “FBAR”) that is required to be filed with the Treasury by June 30 of each year. Although there are relatively few substantive changes from the proposed regulations issued on February 26, 2010, the final regulations do clarify the proposed rules in a number of respects. This update will focus on those provisions in the Final Regulations that are applicable to employee benefit plans, plan sponsors, plan fiduciaries, and plan participants and beneficiaries…
March 16, 2011. Last Wills Lacking, $2.5 Trillion Unprotected (Perth Now). Almost half of the adult Australian population does not have a will, and almost two-thirds of those know they should have one but have done nothing about it. According to research from law firm Slater and Gordon conducted last year, the majority of the 2000 or so wills that were contested progressed to the courtroom to produce a result. Cases negotiated and settled before court cost on average $4000 while those cases that were forced into court cost on average $52,000. With 47 per cent of the nation’s adult population unprotected in terms of a last will and testament…
March 15, 2011. IRS Nearly Doubles Audits Of Wealthy’s Tax Returns (Adviser One). High-net-worth individuals be warned: the IRS is watching. And it’s not doing it return by return any longer; it’s looking at the big picture instead of one-offs, resulting in a rate of audits of the wealthy that nearly doubled in 2010. Detailed information about the rates of audits and their results was released Monday in the 2010 IRS Data Book. The overall odds of any given taxpayer being audited by the IRS were one in a hundred in 2009, according to a Bloomberg report. But in 2010 that changed, with the overall rate edging higher to an overall rate of 1.11% of taxpayers being audited. But the high-net-worth? Those odds have increased, so that now anyone with an income above $10 million is looking at an audit chance of 18.4%, up from 10.6% in 2009…
March 14, 2011. UBS Client In San Diego Gets Probation For Hiding Accounts (Bloomberg Business Week). A UBS AG client in San Diego was sentenced to three years probation after pleading guilty to hiding assets in his Swiss bank accounts from the U.S. Internal Revenue Service. Jeffrey Chatfield, a consultant who advised private companies that sought to go public, was also ordered to pay $96,000 to resolve his civil liability with the IRS, the U.S. Justice Department said today in a statement. Chatfield filed false tax returns from 2000 through 2008 in which he failed to disclose his Bahamian and Swiss accounts at UBS and Credit Suisse Group AG, according to the Justice Department’s statement…
March 14, 2011. IRS Boosted Auditing Of Richest Taxpayers, Almost Doubling Rate Last Year (Bloomberg). The Internal Revenue Service audited 18.4 percent of taxpayers reporting income above $10 million last year, up from 10.6 percent the previous year. Audit rates increased in 2010 for all income groups, except for people with no adjusted gross income, according to data released today in Washington for the fiscal year that ended Sept. 30. Highest earners had the sharpest increases in audit rates. The IRS audited 11.6 percent of taxpayers reporting adjusted gross income between $5 million and $10 million, up from 7.5 percent the year before. Taxpayers making between $75,000 and $100,000 faced the least chance of an audit, with a 0.64 percent rate. Through its voluntary offshore disclosure programs and court cases involving Swiss banks, the IRS has gotten a better understanding of how wealthy people in non-corporate businesses manage their assets…
March 14, 2011. US Citizens’ Bank Dilemma Growing (Geneva Lunch.com). The strange case of John Doe, US citizen who lives in Switzerland and can’t open a local bank account or keep one, is now catching the attention of Swiss media. Le Matin Dimanche (available online only to subscribers) ran a full-page article Sunday entitled “American clients ejected by Swiss banks”, which focuses on the impact on Swiss residents with US connections, of the new US Fatca law, signed into law in March 2010. It goes into effect in 2013. The newspaper’s argument is that Swiss banks are no longer accepting Americans who live in Switzerland as clients, a fact born out by nearly 80 personal stories registered with ACA (American Citizens Abroad), as well as numerous anecdotes that GenevaLunch has collected…
March 11, 2011. More U.S. Citizens Toss Passports As IRS Seeks Hidden Assets (Bloomberg). The number of U.S. taxpayers renouncing their citizenship more than doubled to 1,534 in 2010 from 742 in 2009, according to the Internal Revenue Service. More taxpayers renounced their U.S. citizenship in 2010 than in the previous three years combined, or in any year since at least 2003, according to data compiled by Andrew Mitchel, an international tax attorney in Essex, Connecticut. The increase was prompted in part by the U.S. government’s growing efforts to find and tax the hidden assets of U.S. citizens around the world. Taxpayers who were thinking about giving up their citizenship now have more reasons to make the move to put them outside the IRS’s reach…
March 8, 2011. Man Pleads Guilty To Hiding UBS Account; Also Admits Credit Suisse Link (WSJ). WASHINGTON (Dow Jones)–A former Ohio resident pleaded guilty Tuesday to filing false U.S. tax returns that did not report income he earned in an unreported Swiss bank account held at UBS AG (UBS), the Justice Department announced. The department said the defendant, Edward Gurary, a former Orange Village, Ohio, resident who has lived in Switzerland since last year, also admitted to holding an undeclared bank account with “significant assets” at Credit Suisse Group (CS, CSGN.VX). From 2002 to 2008 Gurary held a UBS account in the name of a Bahamian entity and failed to report on his U.S. taxes the interest income he earned, the department said. Gurary’s guilty plea was based only on the UBS account. A five-page criminal information filed in court by the government offered no information on Gurary’s account with Credit Suisse. However, the Justice Department’s announcement of the guilty plea was the first time the agency has mentioned Credit Suisse by name in any of its U.S. tax evasion cases. Frederick N. Widen, a lawyer for Gurary, said his client “accepted responsibility for his actions.” Widen said Gurary would cooperate with the government if asked to do so…
March 8, 2011. Credit Suisse client pleads guilty to tax evasion (Reuters). A Credit Suisse client pleaded guilty to evading U.S. taxes on Tuesday, marking the first time the government publicly mentioned the bank in its latest wave of tax evasion probes. Defendant Edward Gurary was originally charged with hiding assets at accounts at Swiss bank UBS AG, but he now also admits he hid assets at Credit Suisse. U.S. officials are investigating other banks after UBS in 2009 paid $780 million to settle tax evasion charges. An indictment filed last month charged four bankers, identified by sources as working at Credit Suisse, with encouraging Americans to dodge taxes. Credit Suisse has said it is not a target of any probe.
March 8, 2011. USDOJ: Former Ohio Man Pleads Guilty to Failing to Report His Foreign Bank Account at UBS in Switzerland (7thspace.com). WASHINGTON – Edward Gurary, formerly of Orange Village, Ohio, pleaded guilty today in federal court in the Northern District of Ohio to filing false personal income tax returns for the years 2004 through 2008, the Justice Department and Internal Revenue Service (IRS) announced. Gurary’s guilty plea was accepted by United States District Judge Dan Polster in Cleveland. According to court documents, Gurary, 45, has resided in Switzerland since 2010, but lived in Orange Village during the prosecution years. Gurary admitted that from approximately 2002 through 2008, he owned and controlled a financial account at UBS AG which was in the name of a Bahamian entity called Demko Ltd. and which contained balances ranging from $490,000 to $947,000. Gurary controlled transactions in the Demko account by sending faxes using a code name “Vanda” to UBS from an OfficeMax store in the Cleveland area rather than his home or business. UBS would in turn send his requests for authorizations to officers of Demko in the Bahamas in order to make it appear that Demko owned and controlled the account. During the prosecution years, interest was paid by UBS into the Demko account, in amounts ranging from $3,400 to more than $21,000, all of which Gurary admitted he failed to report on his tax returns…
March 4, 2011. DOJ: Seattle Man To Pay $2.1M Fine For Offshore Bank Profits (WSJ). A Seattle man was sentenced to three years probation and ordered to pay a $2.1 million penalty after admitting he willfully filed a false individual income tax return, which omitted income he earned from his UBS AG (UBS, UBSN.VX) account. According to the Justice Department, Arthur Joel Eisenberg in December admitted to filing a false tax return for 2004 in which he failed to report that he had an interest in or signature authority over financial accounts at Swiss-based UBS. He also admitted to failing to report the income earned on his UBS accounts on his tax return. At the end of 2004, the total balance of Eisenberg’s various UBS accounts exceeded $3.1 million, the Justice Department said…
March 9, 2011. US tax probe tightens noose on Swiss banks (Swissinfo.ch). Swiss banks are coming under increasing pressure in the United States as a second wave of arrests and indictments implicated Credit Suisse in tax evasion. The renewed offensive by the US tax authorities has alarmed the Swiss banking community, sparking fears of a second assault on banking secrecy and rumours regarding which banks may be next to face the music. One bank that has suffered from adverse conditions in the US is the Neue Zürcher Bank (NZB), that closed down its private banking operations in 2009 after a former employee was indicted in the US on tax evasion charges. The bank then announced last week that it would also end brokerage activities, citing “increased complexity of background regulations and the corresponding legacy issues from NZB’s private banking business, as well as the more difficult parameters of cross-border banking business between Switzerland and the US”…
2011 Offshore Voluntary Disclosure Initiative (IRS Website). The IRS is offering people with undisclosed income from offshore accounts an opportunity to participate in a new, voluntary disclosure initiative in order to get current on their tax returns. The 2011 Offshore Voluntary Disclosure Initiative (OVDI) will be available only through Aug. 31, 2011. The 2011 initiative has a higher penalty rate than the IRS’s previous voluntary disclosure program, which ended on Oct. 15, 2009, but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk IRS detection and possible criminal prosecution. In addition, the 2011 initiative includes new guidelines to provide fairness to people with smaller amounts of undisclosed assets or unusual situations. For general details on the 2011 initiative, see news release IR-2011-14, Second Special Voluntary Disclosure Initiative Opens; Those Hiding Assets Offshore Face Aug. 31 deadline. The IRS has also made available the 2011 OVDI information in eight foreign languages for those taxpayers with undisclosed offshore accounts. The agency took this step to reach taxpayers whose primary language may not be English…
March 4, 2011. IRS Foreign Account Disclosure: What About The States? (Forbes). You may be inundated with information about disclosing your foreign accounts to the IRS and making up for your past tax return and FBAR transgressions. After all, though there’s a debate about whether IRS programs amount to bona fide amnesty, that’s what you want. See IRS Offshore Amnesty: Second (Last) Chance. It’s not inexpensive, but paying back taxes, interest, and penalties is a lot better than the alternative—having them track you down and lower the proverbial boom. But one thing you’re not inundated with is information about your state tax problems. As if worrying about the IRS knocking on your door wasn’t bad enough, you have your friendly state tax collector(s) too. Since state income taxes are smaller than federal, you understandably worry about the IRS first and foremost…
March 4, 2011. Former UBS Client Sentenced For Hiding Millions In Offshore Bank Accounts (The Cypress Times). Arthur Joel Eisenberg of Seattle was sentenced today to three years probation by U.S. District Court Judge John Coughenour, the Justice Department and the Internal Revenue Service (IRS) announced today. Eisenberg pleaded guilty in December 2010 to willfully filing a false individual income tax return. According to court documents filed in this case and statements made in court, Eisenberg admitted to filing a false tax return for 2004 in which he failed to report that he had an interest in or signature authority over financial accounts at UBS AG, one of Switzerland’s largest banks. He also admitted failing to report the income earned on his UBS financial accounts on his tax return. At the end of 2004, the total balance of Eisenberg’s various UBS financial accounts exceeded $3.1 million…
March 2, 2011. Voices: Warren Whitaker, On Disclosure To The IRS (WSJ Blogs). The Internal Revenue Service is once again offering an opportunity to individuals who failed to report foreign accounts and now want to come clean. If they come forward and disclose these funds, they know exactly what taxes, interest and penalties they will face, and they will be safe from criminal prosecution. The program follows up on the first disclosure program which was launched in 2009. But this time around, as would be expected, the penalties are stiffer. Not only must individuals pay back-taxes and interest for the past eight years, they’re assessed a penalty of 25 percent of the highest aggregate account balance in the foreign bank accounts over the past eight years…
March 2, 2011. Switzerland Cautioned Over Taxation Transparency (Swissinfo.ch). Switzerland has been cautioned that it should not treat international pressure for increased transparency in taxation matters lightly. In an interview with swissinfo.ch, Pascal Saint-Amans, head of the Global Forum on Transparency and Exchange of Information of Tax Purposes, praised Finance Minister Eveline Widmer-Schlumpf for her recent moves to relax conditions for the release of data on foreign bank account holders. “The Swiss should not make a minor point of serious questions of principle,” said Saint-Amans, adding it was “regrettable” that the issue had provoked such heated debate in Switzerland. The so-called “concessions” offered by Widmer-Schlumpf were prompted by initial feedback from the forum’s peer review examining banking secrecy in Switzerland and are designed to adapt the country to OECD rules…
March 1, 2011. US In Global Offshore Tax Evasion Hunt (Cayman Island News). The IRS clampdown on Swiss bank UBS could be the tip of the iceberg in its fight against tax evasion and financial institutions in other offshore jurisdictions might be targeted for similar treatment, says Jonathan Sambur, a former IRS attorney who now specializes in Tax Transactions in the Washington, DC office of Mayer Brown law firm. He warns new rules, initiatives and legislation, such as the Foreign Account Tax Compliance Act, present major challenges for non-U.S. financial institutions that do business with U. S. account-holders. These institutions he notes have to take heed of the enforcement activity and consider whether they could be a target of future enforcement efforts. It’s all part of the push for “full tax transparency”, said Sambur who will be discussing the issue at next month’s OffshoreAlert conference…
February 28, 2011. IRS Extends Offshore Amnesty (North Bay Business Journal). The Internal Revenue Service has announced a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011. Last year, the IRS cracked down on United States citizens with offshore bank accounts who were not reporting income or filing the proper reports. It created a first voluntary disclosure period when people could come forward. The voluntary compliance period ended last year, but with people still coming forward the IRS decided to create another amnesty period…
February 28, 2011. US tax evasion affair spreads to Leumi. Bank Leumi: We are unaware of any investigation (Globes). A large tax evasion investigation in the US has expanded to Bank Leumi (TASE: LUMI) and Asian banks, “The Financial Times” reports. The heart of the investigation is suspicions that Swiss banks, including UBS AG (NYSE; SWX: UBS), advised clients to divert money to accounts in banks in other countries rather than report them to the Internal Revenue Service (IRS)… “The Financial Times” says that Swiss bankers are afraid that the US authorities will expand their investigation to more Swiss banks, after four bankers from Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) were indicted last week. Garvin says that the US authorities have received information about accounts at Bank Leumi and China Merchants Bank (HKSE: 3968, Shanghai: 600036)…
February 28, 2011. US Widens Tax Evasion Probe Beyond Swiss Banks (Wealthbriefing.com). A US tax evasion probe which has already led to several Swiss bankers being charged has now widened to include Israeli and Asian banks, the Financial Times reported, citing lawyers familiar with the issue. The investigation has been widened because Swiss bankers have advised clients to put assets into banks in other nations rather than report them to the US authorities, the newspaper said. The US Justice Department and Internal Revenue Service have received information about accounts at Bank Leumi in Israel and China Merchants Bank, it said, according to one of its sources. The US has not alleged either bank was engaged in wrongdoing. Bank Leumi said it was not aware of the investigation. A China Merchant Bank representative referred calls for information to its office in China…
February 27, 2011. US probe into tax evasion widens (Financial Times). A US tax evasion investigation that has prompted charges against several Swiss bankers has expanded to include Israeli and Asian banks, according to lawyers close to the probe. The broadening of the investigation follows advice given by Swiss bankers, concerned at an initial probe into UBS, who allegedly told clients to shift assets to banks in other countries rather than report them to the US. “Many of the Swiss bankers simply told their clients that they should move their money to other secret accounts,” said David Garvin, a criminal tax attorney in Miami representing account holders. He said the US government had made clear it was “going after any bank it knows to be a problem.”…. The US Justice Department and Internal Revenue Service have received information about accounts at Bank Leumi in Israel and China Merchants Bank, say Mr Garvin and other lawyers for account holders…
February 23, 2011. U.S. Accuses Four Bankers Connected to Credit Suisse of Helping Americans Evade Taxes (NY Times). Credit Suisse, the big Swiss bank, on Wednesday came under heightened scrutiny of authorities in the United States and Germany over its sale of private banking services that enable tax evasion. The United States Justice Department accused four private bankers on Wednesday of helping Americans evade taxes, widening its investigation of foreign financial institutions. Federal prosecutors in Alexandria, Va., accused the bankers – Marco Parenti Adami, Emanuel Agustoni, Michele Bergantino and Roger Schaerer – of conspiracy and fraud in connection with their banking duties…
February 28, 2011. US Tax Probe Broadens to Israeli, Asian Banks (Financial Times). A US tax evasion investigation that has prompted charges against several Swiss bankers has expanded to include Israeli and Asian banks, according to lawyers close to the probe. The broadening of the investigation follows advice given by Swiss bankers, concerned at an initial probe into UBS, who allegedly told clients to shift assets to banks in other countries rather than report them to the US…
February 25, 2011. A Second Bite at the Apple (Financial Advisor). By now, nearly everyone (or at least everyone with enough money to have a foreign bank account) has heard about the UBS account fracas and the end of Swiss bank-account secrecy. If you didn’t know that your clients have to report foreign accounts to the government, you certainly know now. Maybe you’re hoping that the government won’t notice the account…
February 25, 2011. Swiss Government Says Credit Suisse Case Not Like UBS (FoxBusiness). The Swiss government said Friday it doesn’t believe the indictment of four former Credit Suisse Group (CS: 46.34, 0.00, 0.00%) private bankers in the U.S. this week will avalanche into the type of high-profile case that dogged rival UBS AG (UBS: 19.80, 0.00, 0.00%) for months. “Up until now, we don’t have any indication that this case will develop into something of the magnitude and systemic nature of what we saw at UBS,” Mario Tuor, a spokesman for the State Secretariat for International Financial Matters, or SIF, told Dow Jones Newswires. Under high-ranking Swiss diplomat Michael Ambuhl, the SIF co-ordinates for the government on financial, monetary and tax matters…
February 24, 2011. FinCEN Amends BSA Regs on FBAR Filings (Journal of Accountancy). The Financial Crimes Enforcement Network (FinCEN) on Thursday issued a final rule that amends the regulations under the Bank Secrecy Act (BSA) regarding Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), to clarify when an account is foreign and therefore reportable as a foreign financial account and the definition of key terms like “signature or other authority.” FinCEN, which is an agency of the Treasury Department, said the IRS will soon publish instructions for completing the FBAR form…
February 24, 2011. Prosecutors eye Credit Suisse bankers and customers for tax evasion (FierceFinance). Federal prosecutors continue to wage war on bankers who may have helped wealthy U.S. customers avoid taxes. Along with bankers at UBS and HSBC, bankers at Credit Suisse have found themselves under scrutiny. In fact, prosecutors have just charged that four bankers at the venerable Swiss bank helped 17 clients avoid paying taxes “by setting up offshore accounts and helping conceal their transactions through credit and debit cards linked to those accounts,” reports the Financial Times…
February 23, 2011. IRS Gives Amnesty To Tax Payers With Offshore Accounts (Daily News Pulse). According to Brian Compton, one of the nation’s leading offshore tax evasion defense experts, the price tag may be steep, but the alternative can be penalties of up to 200 percent to 300 percent of the amount owed, not to mention jail time. For those who can show that they were unaware of the foreign account reporting requirements involved with the Foreign Bank and Financial Accounts (FBAR) regulations, or had little contact with the account, particularly if the account held less than $75,000, the penalty drops to 12.5 percent or lower. IRS Commissioner Doug Shulman called the program “the last, best chance for people to get back into the system.”…
February 20, 2011. IRS’ Latest Offshore Accounts Voluntary Disclosure Program Wrong for Many Taxpayers (Forbes). U.S. tax law taxes U.S. citizens and resident aliens on their worldwide income. Many U.S. taxpayers have attempted to evade U.S. income tax by hiding income-generating assets by hiding in foreign bank accounts. Swiss banks have attracted many such accounts, due to Switzerland’s strict bank secrecy laws and low income tax rates. The IRS combats such tax evasion by requiring U.S. taxpayers to annually file a Form TD 90.22-1, Report of Foreign Bank and Financial Accounts (“FBAR”). An FBAR is due to be filed each June 30 for foreign accounts owned as of the preceding December 31…
February 16, 2011. Tax Amnesty: IRS Voluntary Disclosure Part Deux (Forbes). You may be in the midst of tax season, but don’t ignore the IRS announcement of it’s latest “come on down” program, an open door policy for taxpayers who are noncompliant with the maze of tax and reporting required for foreign bank accounts. True, tax cheats are invited, but many unwittingly violated these rules and truly had no idea of the reach of these rules. The new IRS program seems well received so far. It will surely cause some people to step forward with the relative (but not absolute) assurance they won’t end up being criminally prosecuted for failing to declare the existence of (and income on) a foreign bank account…
February 15, 2011. Will Taxpayers Ante Up to Participate in Round Two?: The IRS Offers a New Voluntary Disclosure Program (Holland & Knight). On February 8, 2011, the IRS announced the creation of a second voluntary disclosure program for taxpayers with unreported foreign assets (2011 VDP). In reality, however, the program is designed for taxpayers with unreported foreign income, as the failure to report the existence of non-income producing foreign assets can be cured without participating in the newly announced program. The 2011 VDP differs significantly from the 2009 voluntary disclosure program (2009 VDP), which was announced on March 23, 2009, and terminated on October 15, 2009. While there are a number of differences between the two programs, these are the three most significant…
February 11, 2011. IRS gives ‘last chance’ to disclose offshore accounts (Ha’Aretz). The U.S. Internal Revenue Service is launching a second round of its voluntary disclosure program, which offers reduced penalties for American citizens who have previously failed to report offshore accounts, the agency announced this week. The new initiative – the “last chance” to come clean, according to the IRS – will be available through August 31, 2011…
February 9, 2011. Go for amnesty or face jail: IRS (New York Post). Tax cheats have one final chance to cough up what they owe Uncle Sam or face jail time. Under a new amnesty plan announced by the IRS yesterday, tax dodgers who come forward voluntarily will pay back taxes, interest and steep fines but avoid jail time. They have until Aug. 31 to settle their tax debts going back eight years or risk getting caught up in the international dragnet aimed at US tax cheats who hide assets abroad…
February 9, 2011. IRS Sets Offshore Amnesty, Part II (The Wall Street Journal). The Internal Revenue Service on Tuesday announced a new limited amnesty for U.S. taxpayers with secret foreign accounts that will allow them to pay penalties and avoid jail time. Commissioner Doug Shulman also said investigations of some foreign banks that have helped U.S. taxpayers evade taxes are at an “advanced” stage, though he declined to name any specific targets…
February 9, 2011. IRS Giving Partial Amnesty to U.S. Taxpayers With Hidden Overseas Accounts (Bloomberg). U.S. taxpayers with hidden offshore accounts have until Aug. 31 to decide whether to disclose their holdings to the government without being criminally prosecuted, the Internal Revenue Service said. The voluntary disclosure program announced yesterday will require those who come forward to pay up to 25 percent of the highest annual amount in the account from 2003 through 2010, plus back taxes, interest and other penalties for those years. Tax attorneys said new bank-disclosure requirements that take effect in 2013 could make the offer enticing…
February 9, 2011. IRS Offshore Amnesty: Second (Last) Chance (WSJ). It is not blanket amnesty, though criminal prosecution is highly unlikely. This and other points about the IRS’s newest foray into foreign bank account disclosure are prompting questions. Announced February 8, 2011, the new “2011 Offshore Voluntary Disclosure Initiative” offers what IRS Commissioner Shulman called the “last, best chance” to come clean. Some observers thought the vaunted previous come hither program with its October 15, 2009 deadline was the last best. Now, there’s another with its own set of rules…
February 8, 2011. Second Special Voluntary Disclosure Initiative Opens; Those Hiding Assets Offshore Face Aug. 31 deadline (IRS Website). WASHINGTON — The Internal Revenue Service announced today a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011…
February 8, 2011. IRS Offers New Amnesty For Offshore Tax Cheats (Forbes). The Internal Revenue Service said today that it is giving those with secret offshore bank accounts yet another opportunity—from now until Aug. 31–to fess up and avoid criminal prosecution. The terms of what the IRS is calling the “2011 Offshore Voluntary Disclosure Initiative” are generally a bit stiffer than those of the IRS’ last offshore disclosure initiative, which ended on Oct. 15, 2009, and pulled in 15,000 disclosures of accounts in 60 countries. But this time the IRS added a softer penalty for those with less than $75,000 offshore—often folks who have worked abroad or inherited small amounts in other countries…
February 8, 2011. IRS Announces Second Offshore Voluntary Disclosure Program (Journal of Accountancy). On Tuesday, the IRS announced that it is starting a new program designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts to comply with federal tax law. Under the program, taxpayers that disclose previously undisclosed foreign accounts and comply with the terms of the program can avoid otherwise applicable civil penalties and criminal prosecution…
February 7, 2011. Voluntary Disclosure Renewed for Offshore Cheats (Business Insider). In 2009, the IRS provided a generous voluntary disclosure program for people who had money socked into offshore accounts. IRS. Ordinarily, the taxes, interest (at 20%), accuracy-related penalty (at 20% of the tax liability) and FBAR penalties –at 50% of the account amount over several years–could add up to considerably more than the amount in the account. The 75% penalty for fraud is a definite potential, and criminal prosecution (for tax evasion, failure to file a return, filing a false return, etc.) is a possibility too…
February 6, 2011. OECD wants more Swiss help in tax cheat hunt-paper (Reuters). The Organisation for Economic Co-operation and Development (OECD) wants Switzerland to make the international hunt for tax evaders easier, a Swiss newspaper reported on Sunday. The OECD criticised current Swiss requirements for legal assistance in cases of tax evasion, saying they were too restrictive and an obstacle for an effective exchange of information, weekly SonntagsZeitung said, citing a government document…
February 4, 2011. IRS poised to announce new FBAR amnesty (Washington Business Journal). Since 2009, the Internal Revenue Service has granted amnesty from criminal prosecution to nearly 20,000 “honest innocents” who failed to report their offshore income and failed to file foreign bank account reports (FBARs). Recently, IRS has floated a series of trial balloons to gauge public reaction to a massive new voluntary disclosure initiative…
January 26, 2011. IRS to Announce New Amnesty Program for Offshore Accounts – Terms promise to be harsher than in an earlier program. (AdvisorOne). The IRS has announced a new amnesty program aimed at encouraging wealthy Americans with hidden offshore bank accounts to come forward, declare their money and pay taxes owed, according to a report in The New York Times on Tuesday. An IRS spokesman quoted in the report declined to give details, but said the program would be formally announced “very shortly” and would not offer terms as generous as those put forth in a similar initiative last fall. At press time, an IRS spokeswoman again declined to comment on the new program…
January 25, 2011. WikiLeaks, Swiss bank accounts, and Israelis (Globes). Two CDs may contain the names of Israeli residents with unreported bank accounts in Switzerland. Should they be concerned? WikilLeaks recently said that a former Swiss banker handed it two CDs reputedly containing details on up to 2,000 wealthy individuals and corporations. It appears that these CDs contain the names of Israeli residents, who did not report the existence of their bank accounts in Switzerland nor the income they derived in these bank accounts. This matter raises the question of how much Israeli residents should be concerned by the recent development…
January 24, 2011. Offshore Banks Must Adapt or Die in WikiLeaks Era: Matthew Lynn (Bloomberg). You might think this is a great time for the offshore-banking industry. There is a lot of spare cash sloshing around the world. The mega-rich are still piling up money. Taxes are likely to go up as every developed country tries to cope with huge deficits, creating even more incentive to shift money to some island hideaway. But it’s not so easy anymore…
December 22, 2011. Ex-UBS Banker Admits Urging Clients to Open Undeclared Accounts (Bloomberg). Former UBS AG banker Renzo Gadola pleaded guilty to helping wealthy American clients hide assets from the Internal Revenue Service, as the U.S. crackdown on offshore tax evasion widened. Gadola, 44, today admitted conspiring with a Swiss banker to encourage U.S. clients who hadn’t told the IRS about their UBS accounts to open undeclared accounts at Basler Kantonalbank. Gadola, who is cooperating with prosecutors, entered his plea in federal court in Miami…
January 20, 2011. Still Have A Foreign Bank Account? (Forbes). If you have a foreign bank account holding more than $10,000 at any time during the year, you have several important IRS obligations (a) Check the “yes” box on Schedule B to your IRS Form 1040 disclosing that you have a foreign account…
January 12, 2011. IRS Enforces Stricter Rules on Professional Tax Preparers (American Chronicle). Effective January 1, 2011, the Internal Revenue Service will expand its watchdog duties and require all paid tax preparers who sign, prepare or assist with preparing federal tax returns to have a Preparer Tax Identification Number (PTIN). The California Franchise Tax Board estimates the new PTIN requirement will impact 80,000 tax preparers statewide…
January 6, 2011. IRS Increases Aggressive Tax Collection Efforts (Tax Center). The IRS has gotten increasingly more aggressive with its tax collections practicesThe need for tax reform and the IRS’s harsh collection techniques top taxpayers’ most serious problems, according to the National Taxpayer Advocate (NTA) annual report to Congress…
January 10, 2011. IRS eyes offshore tax cheats beyond Switzerland.But few think the agency will have the same success it did with UBS. WASHINGTON — Internal Revenue Service Commissioner Doug Shulman closed out 2010 by dining out one last time on the success of the agency’s recently-concluded enforcement effort against Switzerland’s premier financial institution, UBS AG…
December 28, 2010. Know Tax Shelters When You See Them? (Forbes). The announcement that Deutsche Bank is the latest to pay a whopping ($553.6 million) payment settling charges it participated in a raft of tax shelters between 1996 and 2002 brings into sharper focus the need to know just what a tax shelter is. Sometimes it can be in the eye of the beholder, or even rekindle reference to Justice Potter Stewart’s famous “I know it when I see it” definition of pornography…
December 27, 2010. Americans in Israel benefiting from new IRS amnesty (Jerusalem Post). IRS initiative to offer offshore disclosure program to Americans abroad; US citizens failing to disclose assets in Israeli banks may face penalties. American citizens holding accounts in Israeli banks may have an opportunity to benefit from a new initiative of the US Internal Revenue Service to offer an offshore voluntary disclosure program to Americans living abroad…
December 27, 2010. Tax Shelters Not Über Alles (Forbes). Some phrases sound unsavory, even untoward. To some people, “tax shelter” is increasingly one of them. It’s not the reducing taxes part that seems objectionable. It’s the sense of privilege and presumed tax gerrymandering that seems to surround them. Shelters can even rekindle our collective disdain for Leona Helmsley’s “Only the little people pay taxes.”…
December 23, 2010. Swiss Banker Pleads Guilty in U.S. Tax Case (Wall Street Journal). A Swiss banker pleaded guilty Wednesday to advising a wealthy U.S. client to hide an account at a regional bank in Switzerland, a development that could mark a new chapter in the U.S. crackdown against offshore tax evasion. The case appears to be the first in the U.S. crackdown in which prosecutors charged a banker with helping U.S. clients conceal funds in a Swiss…
December 22, 2010. Deutsche Punished On Bogus Shelters (Wall Street Journal). NEW YORK—Deutsche Bank AG agreed Tuesday to pay $553.6 million and admitted criminal wrongdoing to settle a long-running probe over fraudulent tax shelters that allowed clients to avoid paying billions of dollars in U.S. taxes. Under a nonprosecution agreement with the U.S. Attorney’s office in Manhattan and the Internal Revenue Service, the German bank won’t be prosecuted for its participation in about 15 tax shelters involving more than 2,100 customers…
December 21, 2010. Leading Offshore Tax Evasion Defense Expert Says Overseas Bank Account Holders Still Need Tax Relief as IRS Plans Further Actions (San Francisco Chronicle). Tax Resolution Services, Co., emphasizes importance of compliance under the rigid system-but taxpayers should not try this without the help of a professional skilled in offshore tax evasion defense and FBAR requirements…
December 15, 2010. Offshore tax crackdown continues (South Florida Business Journal). A Swiss banker who told a U.S. client he had nothing to worry about from a federal offshore tax evasion crackdown is now facing federal charges. The federal government’s battle to contain offshore tax evasion is heading into 2011 with a new case filed in Miami against Renzo Gadola, a former banker for UBS Bank…
December 13, 2010. IRS Mulls Amnesty Program for Offshore Tax Evaders (onwallstreet). IRS Commissioner Doug Shulman said the IRS may re-open its voluntary disclosure program, offering a partial amnesty to tax evaders who have been hiding money in foreign bank accounts…
December 10, 2010. IRS Hiring Agents in Abusive Transactions Group. IRS is aggressively pursuing people who were involved with 419e or 412i plans by hiring more agents in the abusive transactions group. People who were or are in these plans and haven’t taken steps to protect themselves must do so fast…
December 9, 2010. Shulman Says IRS `Seriously Considering’ New Amnesty for Offshore Accounts (Bloomberg). The U.S. Internal Revenue Service is “seriously considering” a new partial amnesty program for taxpayers who report secret offshore bank accounts, Commissioner Douglas Shulman said today. Shulman said the IRS may repeat a voluntary disclosure program such as one that drew nearly 15,000 taxpayers between March 2009 and October 2009. They avoided prosecution by declaring accounts and paying fixed penalties. Since then, another 3,000 taxpayers declared accounts and face undetermined penalties…
December 9, 2010. UBS tax case brings more leads (swissinfo.ch). Leads from the US case against Swiss bank UBS have helped Washington to find “numerous banks” and other promoters of tax evasion in Asia and the Middle East. United States tax chief Douglas Shulman made the announcement on Thursday as part of his remarks to a tax conference in Washington, DC…
November 29, 2010. U.S. Government Closing in on HSBC Account Holders with Indian Ties and Other Banks. (benziga). Following their successful investigations into offshore Swiss bank, UBS, and those taxpayers with undisclosed accounts, it is believed the Internal Revenue Service (IRS) and the Department of Justice (DOJ) are investigating HSBC banks in order to find U.S. taxpayers who may have evaded taxes by depositing funds into undisclosed offshore bank accounts in India…
November 27, 2010. Foreign accounts under renewed IRS scrutiny (The Palm Beach Post). West Palm Beach tax attorney Michael Lampert recently complained that penalties as high as 50 percent of an account value annually are keeping taxpayers from fessing up to the IRS about foreign financial accounts. Might the IRS have heard him? IRS Commissioner Doug Shulman has indicated the IRS could have a second so-called amnesty program for persons who come forward to disclose their foreign accounts.
November 1, 2010. UPDATE 1-Israeli bank to US taxpayers: disclose accounts (Reuters). WASHINGTON, Nov 1 (Reuters) – Leumi (LUMI.TA), Israel’s biggest bank, is requiring U.S. clients to declare their deposits to the Internal Revenue Service, amid heightened scrutiny of offshore accounts by U.S. authorities. The bank is asking its clients to declare that they are not U.S. clients, or to reveal their accounts to U.S. authorities, according to a letter to clients obtained by Reuters.
November 1, 2010. Israeli bank to U.S. taxpayers: disclose (Reuters). Leumi, Israel’s biggest bank, is requiring U.S. clients to declare their deposits to the Internal Revenue Service, amid heightened scrutiny of offshore accounts by U.S. authorities. The bank is asking its clients to declare that they are not U.S. clients, or to reveal their accounts to U.S. authorities, according to a letter to clients obtained by Reuters…
Summer, 2010. Scope of IRS Voluntary Disclosures (Florida Bar Tax Bulletin, Page 25). What is the scope of the Internal Revenue Service’s (“Service”) voluntary disclosure program? Does it apply only to income tax issues? What about gift and estate tax issues? We are currently in discussions with the Service to resolve these questions. Assume that a taxpayer (“Taxpayer”) received a Swiss bank account from his father in the year 2001, which transfer was not reported to the Service…
August, 2009. New Penalty Guidance Provided for UBS (And Other) Offshore Accountholders Coming Forward Through Voluntary Disclosures (Florida Bar Tax Section Bulletin, Page 4).The Internal Revenue Service (the “Service”) appears to have capitulated by issuing a national penalty guidance initiative in an effort to lure American taxpayers with unreported Swiss and other offshore financial accounts back into the U.S. tax system. Despite several statements made both publicly and privately in recent months that the Service would not be introducing a national settlement initiative or similar program, on March 26, 2009, the Service publicly released a series of memoranda that detailed a coordinated attack on offshore account non-compliance as well as a new penalty framework to apply to voluntary disclosure requests involving offshore accounts…
August, 2009. UBS, Offshore Accounts and Voluntary Disclosure A question and answer primer (Florida Bar Tax Section Bulletin, Page 17). 1. What is all of this about UBS and offshore accounts? For years persons subject to U.S. taxation have been establishing offshore accounts. There are many reasons for doing so. Some of the more common reasons include asset protection and access to foreign investments that are not registered for sale in the U.S. Some accounts are established for convenience, such as when U.S. persons also own foreign real estate and/or are vacationing or working offshore. Other accounts were established while the person was a foreign national prior to coming to the U.S. and establishing residency or citizenship and were never closed. (This article is not addressing when a non citizen becomes subject to U.S. taxation)…
May 4, 2009. Obama Takes Aim At Tax Havens, Loopholes (CBSNews). Plan Would Eliminate Tax Deductions For Some Foreign Profits, Crack Down On Wealthy Who Send Money To Tax Haven Countries
