A resident of Saratoga, California, was recently convicted of filing false tax returns and making false statements to an Internal Revenue Service (IRS) agent during an audit. The taxpayer, who owns part of a home-based international trading business, failed to report profits related to sales to China during 2006 and 2007, and he made false statements concerning ownership of foreign bank accounts.
For those taxpayers who may still be on the fence about whether to voluntarily disclose offshore assets, the time to decide is now! The Internal Revenue Service (IRS) has announced that the 2014 Offshore Voluntary Disclosure Program (OVDP) will close on September 28, 2018.
The IRS Large Business and International division (LB&I) is rolling out a series of campaigns focused on specific compliance issues. The division analyzed extensive data as well as suggestions from IRS compliance employees and the tax community to improve large business compliance activities.
On June 1, 2017, U.S. Ambassador Margaret Ann Uyehara and Montenegrin Finance Minister Darko Radunovic signed an Intergovernmental Agreement (IGA) to combat offshore tax evasion by implementing the provisions of the Foreign Account Tax Compliance Act (FATCA). Banks from Montenegro will be able to share information about financial accounts of U.S. citizens with the IRS.
Seven years, 100,000 taxpayers and over $10 billion in taxes, interest, and penalties paid, and the IRS' offshore voluntary compliance efforts are still going strong.
The US Department of Justice recently determined that the Singapore affiliate of UBS (UBS AG) "has complied with an Internal Revenue Service (IRS) summons for bank records" related to a taxpayer whose liabilities are at issue. The international financial institution refused to produce the records when first served the summons. After a petition was filed to enforce the summons formally, UBS and the IRS resolved the matter amicably and the petition was voluntarily dismissed.
The US Department of the Treasury Financial Crimes Enforcement Network (FinCen) announced on May 11, 2016, that it is issuing final rules under the Bank Secrecy Act to "clarify and strengthen customer due diligence (CDD) requirements for: Banks; brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities." The final rules, which have been four years in the making, will be effective July 11, 2016. Covered financial institutions must come into compliance by May 11, 2018.
On Friday, October 2, 2015, the Internal Revenue Service ("IRS") announced the exchange of financial account information with certain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act.
Once again, the Department of Justice has flexed its muscles and shown dishonest financial professionals that if they help clients hide assets offshore or create sham entities for clients to evade taxes, they will be prosecuted. The tax preparers in this case helped their wealthy clients to conceal millions of dollars of assets and income in secret foreign bank accounts, filed false federal income tax returns, maintained an offshore account in the name of a sham corporation and failed to disclose the account to the IRS. They also failed to file a Report of Foreign Bank and Financial Accounts (FBAR). Two of the three tax preparers have been sentenced to 36 and 50 months in prison and ordered to pay fines of nearly $300,000. The third tax preparer is still at large. To learn more, click here.
In the past two weeks, three Swiss banks--Bank Linth LLB AG (Bank Linth), Bank Sparhafen Zurich AG (BSZ), and Ersparniskasse Schaffhausen AG (EKS)-have reached resolutions under the Department of Justice's Swiss Bank Program. The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.