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Los Angeles Tax Preparers Convicted of Helping Clients Across the U.S. Hide Money Overseas

Los Angeles Tax Preparers Convicted of Helping Clients Across the U.S. Hide Money Overseas

According to a recent United States Department of Justice press release, a California jury convicted two Los Angeles tax preparers of conspiring to defraud the Internal Revenue Service and willfully failing to file a Report of Foreign Bank and Financial Accounts (“FBAR”). The men will reportedly be sentenced for their crimes in March 2015.


According to evidence offered at trial, the father and son team operated a tax preparation company with a number of offices located across the nation. The two California men apparently used their business to assist wealthy clients with hiding money overseas by incorporating offshore companies in Belize and other nations, opening secret foreign bank accounts in both Israel and Luxembourg, and filing false tax returns on their clients’ behalf. At trial, prosecutors alleged that the corporate entities were formed to act as offshore account holders in an effort to conceal each taxpayer’s true identity. The money transferred overseas was then falsely reported as a corporate expense or investment loss on a client’s federal income tax return.



As part of the conspiracy, the convicted tax preparers elected not to report their clients’ foreign financial interests or the income that was earned from the overseas accounts on either the FBAR or their clients’ federal income tax returns in 2008 and 2009. As a result of the unlawful tax scheme, each client significantly underpaid his or her full federal tax liability. Under current law, any tax preparation clients who willingly participated in the illegal tax evasion scheme could potentially face criminal prosecution.


All U.S. taxpayers with an ownership interest in or signature authority over a foreign financial account with a balance of at least $10,000 in a given tax year are required to file the FBAR with the U.S. Treasury by June 30th. This requirement applies to an overseas savings, checking, or secured credit card account, insurance policies that may be cashed out, foreign securities, and mutual funds. A taxpayer who fails to timely file the FBAR may face criminal prosecution and incur financial penalties of up to one-half of the highest unreported offshore account balance. In addition, American taxpayers must disclose any ownership interest in an offshore bank account on Schedule B of their federal income tax return and report all income earned from such an account to the IRS.


If you have questions about your international income tax obligations, you should contact a seasoned international tax attorney to discuss your situation. William Hartsock is a certified tax law specialist with more than 30 years of experience helping clients in San Diego and across Southern California with their international income and other taxation issues. For a free consultation with a veteran tax lawyer, do not hesitate to call Mr. Hartsock today at (858) 481-4844 or contact him through his website.


Additional Resources:

Tax Return Preparers Convicted of Assisting Wealthy Clients Hide Millions in Secret Offshore Accounts at Israeli Banks, United States Department of Justice Office of Public Affairs Press Release dated December 19, 2014



Photo Credit: ArielleJay, MorgueFile

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