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Criminal Prosecution Reminds Taxpayers in California and Elsewhere to Voluntarily Report Offshore Bank Accounts

Criminal Prosecution Reminds Taxpayers in California and Elsewhere to Voluntarily Report Offshore Bank Accounts

According to the United States Justice Department, a New Hampshire businessman recently pleaded guilty to filing a false and fraudulent federal income tax return for the 2009 tax year. The man apparently jointly held a secret offshore bank account in Switzerland with his sister. The high balance of that unreported overseas financial account purportedly reached about $1.3 million in 2009. In addition, the businessman reportedly failed to report his interest in a financial account with an Israeli banking institution on his income tax return.


Interestingly, the man reported his ownership interest in assets stored in the Bailiwick of Jersey, a small British possession located in the Channel Islands, on his 2009 federal income tax return. Additionally, the man’s 2009 Report of Foreign Bank and Financial Accounts (“FBAR”) apparently included information regarding his Israeli and Jersey assets, but it failed to disclose his financial interest in the jointly-owned Swiss bank account. Although the man earned more than $66,000 in interest from his foreign bank accounts in 2009, he only reported earning interest income of $350. In total, the New Hampshire man is accused of failing to report at least $170,000 in interest income derived overseas between 2006 and 2009.



A U.S. taxpayer who has an ownership interest or signature or other authority over an offshore bank account or other asset with an aggregate balance of $10,000 at any time during the tax year is required by law to file an annual FBAR. A taxpayer is also required to disclose the account on Schedule B of his or her individual income tax return. Foreign financial assets include a checking, savings, or secured credit card account, foreign securities, insurance policies that may be cashed out, and mutual funds. An American taxpayer’s failure to timely file the FBAR can result in significant financial penalties of up to one-half of the highest undisclosed account balance as well as possible incarceration.


The New Hampshire businessman will be sentenced in connection with his guilty plea in January. He currently faces up to three years in federal prison and a fine of up to one-quarter of a million dollars. Additionally, the man has agreed to pay a civil penalty equal to one-half of his interest in the highest balance of the undisclosed Swiss bank account.


If you have an ownership or other interest in an undisclosed overseas financial asset, you should consider utilizing the Offshore Voluntary Disclosure Program to come into compliance with the nation’s tax laws. For more information about your international income tax obligations, do not hesitate to contact certified tax law specialist William Hartsock today. Mr. Hartsock is an international tax attorney with more than three decades of experience helping clients in Southern California successfully navigate the Internal Revenue Code. To discuss your situation with a dedicated tax lawyer, please call Mr. Hartsock at (858) 481-4844 or contact him online.


Additional Resources:

New Hampshire Man Pleads Guilty to Filing False Tax Return, United States Department of Justice Press Release dated October 20, 2014



Photo Credit: larryfarr, MorgueFile


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