Tag Archive for tax evasion

Think You Got Game? Try Solving A Criminal Tax Problem – Part I

While reading can aid in learning, there is no substitute for doing. Reading about what steps should be taken to solve a tax problem is no different than reading about how to ride a bicycle. In the same way that the only way to learn how to ride a bicycle is by experiencing it firsthand – i.e., by physically getting on it (and perhaps falling off it more than once) – the only way to become proficient at solving tax problems is by trudging through a multitude of hypotheticals. Therefore, my motto is, “Learning by doing.”

So why not test your problem solving skills out on a true-to-life hypothetical? Below is a fact pattern based upon a real case. While the analysis is quite detailed, it is nonetheless very practical in the sense that it covers issues that come up with the greatest frequency for tax preparers who are “on the front lines.” In fact, if I had to venture a guess, I’d say that Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

The United States Knows Where Offshore Tax Evaders Live And Bank!

The United States is tracking down hidden offshore accounts, and the latest news is a report that shows which states have the most taxpayers disclosing such accounts (California is No. 1), and where they are located (Switzerland is tops).

Taxpayers in at least 45 states and the District of Columbia reported accounts in 68 countries and territories.

The new U.S. Government Accountability Office report: “IRS’s Offshore Voluntary Disclosure Program (OVDP): 2009 Participation by State and Location of Foreign Bank Accounts,” is a supplement to its March 2013 report, “Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion.” Read More

Written by | Posted in International • IRS • OVDP • Tax Fraud/Evasion/Crimes

Israeli Bank Client Pleads Guilty to Filing False Tax Return

The Latest in a Series of Defendants to be charged on Monday, January 14, 2013 with Concealing Accounts at Israeli Banks was a Beverly Hills resident. We originally posted The Long Arm of the IRS Reaches Israeli Shores – Oy Vey! which discussed that recent Articles about the IRS, FATCA and Israel, are proof that the IRS’ Probe into Secret Offshore Bank Accounts is not just limited to Switzerland.

Now Monajem Hakimijoo, also known as Manny Hakimi, of Beverly Hills, Calif., pleaded guilty on Feb. 13, 2014, in the U.S. District Court for the Central District of California to filing a false federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced Monday, February 17, 2014. Read More

Written by | Posted in Europe, Middle East • FATCA • FBAR • North America • Tax Fraud/Evasion/Crimes

Beanie Baby Billionaire Requests Leniency

“Beanie Baby Billionaire Requests Leniency after Tax Evasion Conviction: H. Ty Warner, the billionaire creator of Beanie Baby plush toys and owner of Ty Warner Hotel & Resorts, whose operations include the Four Seasons Hotel in New York, New York, asked a judge to give him probation, rather than prison, for evading more than $5.5 million in taxes on secret Swiss accounts that held as much as $107 million. (He pled guilty on October 2, 2013, and agreed to pay a civil penalty of approximately $53.6 million.) Warner is to be sentenced in Chicago on January 14, 2014, and faces up to five years in prison under nonbinding guidelines. The Beanie Baby creator and hotelier requests probation with community service, rather than a prison sentence. U.S. v. H. Ty Warner, N.D. Ill., No. 13 CR 00731.”

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Written by | Posted in Tax Fraud/Evasion/Crimes

FATCA Registration in Full Swing; More Countries Signing FATCA IGAs

Foreign Financial Institutions are not getting the best of Christmas presents this year. Instead of getting sugar plums in their stockings, they are getting FATCA and GIIN!

By brief background, under the Foreign Account Tax Compliance Act, (FATCA), foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) must agree to verification and due diligence procedures – meaning they must be on the look-out for customers, owners or beneficiaries evidencing any “US indicia”. They must identify and report directly to the United States Internal Revenue Service (IRS) or their own government via an intergovernmental agreement (IGA), information on US account holders/owners. They must look through their customers and counterparties’ ownership to find “substantial United States owners” (generally, more than 10 percent ownership). Read More

Written by | Posted in FATCA • IRS

The Bancroft Case: Circular Cash Flows and Reserves

The Bancroft case has been working its way through various federal jurisdictions over the last few years. In theory, it involves a captive insurance scenario. In reality, it’s tax evasion, plain and simple.

For me, the dead giveaway is the the “round trip” nature of the transaction. Consider this explanation of the program from the decision:

Sigel and Barros formed Bancroft. They didn’t know much about insurance so they outsourced the underwriting function, actuarial responsibility, claims handling, accounting function, due diligence inquiries, and routine paperwork chores. They also outsourced much of the investment operation. One of Bancroft’s primary investment vehicles was to make Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Monday Was The Swiss Bank’s Deadline to Reveal Hidden US Accounts To The IRS!

Approximately 300 Swiss Banks had until the end of Monday December 16, 2013, to decide whether to turnover their records to the Internal Revenue Service. “I can confirm that the deadline is this evening, at the end of the business day, “a spokesman for Swiss financial market regulator FINMA, told AFP, refusing to say how many banks had already signed up to take part in the program.

On Thursday, August 29, 2013, we previously posted “Swiss Banks Agree to Plan to End Past US Tax Evasion Issues!“) where we discussed that under a deal reached between Bern and Washington, Swiss banks are ready to pay big fines for sheltering United States tax fugitives under the terms of a new deal approved by the Swiss Government. Read More

Written by | Posted in Europe, Middle East • FATCA • FBAR • International • Tax Fraud/Evasion/Crimes

Learn The Real Facts: Unresolved US Tax Liabilities, Re-Entry To USA, Renewal Or Revocation of Your US Passport

There is a lot of misinformation on the internet nowadays on this topic. While overseas Americans must be careful not to fall prey to, what I consider, unscrupulous advisors that liberally employ certain scare tactics, neither must such Americans be complacent with their tax situation. It is clear that the Internal Revenue Service and Congress have set their sights on United States persons living and working abroad because the potential for tax evasion is greater with offshore assets and accounts. Here’s the scoop about unresolved tax liabilities and what they can mean for the American living abroad.

Federal Tax Lien

Taxpayers living overseas are often misinformed or often conveniently forget about their US Read More

Written by | Posted in International • North America • Tax Policy

Spilling The Beans – Advisors Turning in Clients With Offshore Accounts

Swiss bank employees handing over US Depositor information to the United States.My earlier blog post predicts that foreign banks will tell all in order to avoid criminal prosecution for aiding tax evasion. Not only will the foreign banks tell all – it looks like personal financial advisors will be getting in on the act, too. Evidence of this can be gleaned from a recent article published by the Wall Street Journal (August 23, 2013), “Offshore-Adviser Plea Marks a Shift in Tax Crackdown”.

Laura Saunders, the author, believes that a recent guilty plea by a high-level Swiss adviser who helped United States taxpayers hide money overseas indicates a shift toward a new phase of the US Government’s campaign against undisclosed offshore holdings. The Government is making deals with the advisors who are willing to spill the beans. This latest tactic obviously gives the Government yet another very powerful weapon in its stockpile to combat offshore tax evasion.

A chart summarizing significant statistics about offshore account cases also accompanied Ms. Saunder’s article. It is quite revealing and is reproduced below. The numbers clearly demonstrate the IRS has hit the penalty jackpot by relentlessly pursuing undeclared foreign accounts. With all the penalty money coming at a time when the US debt is spiraling out of control, it is unfathomable that the Government will not do all in its power to keep riding this tidal wave of greenbacks. The statistics demonstrate that more US taxpayers have been criminally charged since 2009 than the number of taxpayers who have pled guilty or suffered a guilty verdict. The pressure is on and it looks more than likely that the number of pleas or verdicts will just continue to climb as the IRS keeps learning more and more. Read More

Written by | Posted in United States

US Government Crushes Beanie Babies Founder

TaxConnections Picture - Uncle Sam ShakedownThe IRS is at it again going after famous people to make big publicity splashes about their criminal prosecutions. This time, it involves 69-year-old H. Ty Warner, the inventor of Beanie Babies the craze of the 90s, for having Swiss bank accounts. The Department of Justice and IRS love to attack popular and well-known people in order to demonstrate that the government uses force against people who are “tax evaders”.

I am not arguing that Mr. Warner did not violate US tax law, but the Government once again is using the prosecution of a famous person such as Mr. Warner (previously Lauryn Hill, Wesley Snipes, Leona Helmsley, etc) to show that it will use the full force of the government to collect taxes.

The really sad part of this is that if Mr. Warner were a citizen of almost any other country, earning income in a foreign country would not be considered taxable. The US is one of only 2 countries that taxes of foreign earnings of its citizens. None of the news articles and commentary mentioned this very important fact. I am sure there are celebrations at the Department of Justice and the IRS about the great publicity and “deterrent effect” that they are getting with this prosecution. But no one is thinking about the real ultimate deterrent, that of encouraging businesses and successful business owners to stay away from the US, give up their citizenship, or form entities in any other country for tax and business reasons.

This is very sad!

In accordance with Circular 230 Disclosure

Written by | Posted in United States

Strategic Decision-Making In Criminal Tax Cases – Part 1

TaxConnections Member and Blogger posts about criminal tax casesTO FILE OR NOT TO FILE AN AMENDED RETURN TO CORRECT AN ORIGINAL RETURN THAT HAS CRIMINAL TAX DIMENSIONS – THAT IS THE QUESTION

Your client has filed a fraudulent return underreporting his tax liability. He now has misgivings. He comes to you and expresses great concern. What should you do?

The crime of tax evasion is complete upon filing the return. There are two possible exceptions. First, if the taxpayer filed the return before the normal due date (April 15 for an individual taxpayer and March 15 for a calendar year corporation), the taxpayer can purge the fraud by filing a non-fraudulent amended return on or before the normal due date. This opportunity also applies if a superseding return purges the fraud during an applicable extension period.

More times than not, the taxpayer cannot qualify for these exceptions and the question becomes one of damage control. Is it wise to file an amended tax return – after the due date – to correct an original return that has criminal tax dimensions? There are two schools of thought. First are those practitioners that oppose filing an amended return to correct an original return that contains an understatement of tax liability. They rely on the common-sense argument that doing so will establish one of the key elements of tax evasion: tax due and owing. Thus, making such an admission does nothing more than bring the taxpayer one step closer to conviction and his attorney one step closer to an ineffective assistance of counsel claim, having assisted the government in proving its case against his client. Read More

Written by | Posted in Federal • Individual • United States
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