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Criminal Prosecution Reminds Taxpayers in California and Elsewhere to Report Offshore Assets

Criminal Prosecution Reminds Taxpayers in California and Elsewhere to Report Offshore Assets

Earlier this month, an 83-year-old Florida man pleaded guilty to hiding up to $1.1 million in undeclared Swiss bank accounts. He also admitted to submitting false federal tax returns and engaging in a conspiracy that lasted for approximately 25 years. According to United States authorities, the man went so far as to move his undisclosed foreign financial accounts to an Israeli bank after learning that the U.S. government was cracking down on Swiss banking institutions for their alleged role in assisting American taxpayers with concealing overseas assets.


In May 2014, Credit Suisse bank agreed to pay billions of dollars in penalties and settlements for helping U.S. citizens and permanent residents hide assets in offshore accounts. Similarly, Swiss bank UBS agreed to pay a multi-million dollar penalty for the same conduct in 2009. The companies also agreed to disclose the names of U.S. individuals with an ownership interest in a Swiss bank account. Since that time, several American taxpayers were charged with attempting to evade their international income tax obligations.


The Florida man apparently failed to report income earned from foreign financial accounts on his federal income tax returns between 1987 and 2012. The man also did not file a required Report of Foreign Bank and Financial Accounts during that time. He now faces a maximum prison sentence of up to five years and over $600,000 in financial penalties. As part of a plea agreement, the elderly Florida man agreed to assist federal prosecutors with a number of ongoing tax evasion investigations.



Beginning in 2009, the Internal Revenue Service’s Offshore Voluntary Disclosure Program (OVDP) has allowed a U.S. citizen who previously failed to report assets maintained with a foreign financial institution to come into compliance with the nation’s federal income tax laws. Since that time, the agency has collected about $6.5 billion in unpaid taxes from approximately 45,000 offshore financial account holders through the program. Currently, American taxpayers who willfully fail to disclose financial assets maintained with an overseas banking institution that is publicly identified as being under investigation or cooperating with a U.S. government investigation are subject to a penalty of one-half of the account’s value. In addition, OVDP penalties for American taxpayers who did not willfully use an overseas bank account to evade taxes but still failed to report the assets are much lower than for willful violators.


San Diego residents who maintain unreported assets in a foreign financial account should consider using the OVDP to become compliant with U.S. tax laws. If you have questions regarding how to take advantage of the OVDP, you should contact a knowledgeable international tax attorney. Certified tax law specialist William Hartsock has advised many Southern California clients with overseas assets on how to maintain compliance with current IRS rules. To discuss your situation with Mr. Hartsock, please call (858) 481-4844 or contact him through his website.


Additional Resources:

Florida man hid $1.1 million from the IRS. How did he do it?, by Joseph Ax and Jonathan Stempel, The Christian Science Monitor



Photo Credit: DodgertonSkillhause, MorgueFile

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