According to a Department of Justice press release, a Florida businessman recently plead guilty to counts of willful failure to file an FBAR and tax evasion. This story highlights the fact that although most of the world has slowed down due to the COVID-19 pandemic, IRS investigations and enforcement actions are nonetheless moving forward. If you have failed to file a tax return for one or more years or have taken a knowingly false position on a filed income tax return, it is in your best interest to contact an experienced tax defense attorney today to discuss your options to come into compliance.
Court documents reveal that Lake Worth, Florida resident Dusko Bruer pleaded guilty last week to several criminal tax-related counts that stemmed from his actions in his role as owner and operator of an agricultural machinery company. Bruer’s company focused on buying machinery and parts and selling them to buyers inside and outside the United States.
Defendant Was Not Paid a Salary But Used Millions of Company Dollars
Although Bruer did not draw a salary from the company, he did extensively use the business bank accounts to pay for his lavish lifestyle. Some of Bruer’s expenses included the purchase of a yacht, the purchase of several homes, and the acquisition of other real property in Serbia. Prosecutors alleged that between 2007 and 2011, Bruer transferred more than $5.8 million of company profits to bank accounts in foreign countries. From 2007 through 2014, the defendant was responsible for the company’s failure to pay any corporate tax, despite its more than $7.7 million in income. Additionally, Bruer or the company never filed employment tax returns or paid over the associated payroll tax.
Foreign Bank Recommended OVDP, But Defendant Failed to Participate
Federal authorities also asserted that Bruer had various foreign bank accounts that went unreported. Federal law requires that bank accounts at foreign financial institutions with a high-balance of $10,000 or more at any point in the year must be disclosed on a Report of Foreign Bank or Financial Account (FBAR). Prosecutors asserted that although Bruer knew of his legal obligation to file an FBAR, he willfully failed to do so, which is a felony.
In 2015, his Swiss bank closed Bruer’s account and suggested that he enter into the IRS Offshore Voluntary Disclosure Program (OVDP). The OVDP allows taxpayers to avoid criminal prosecution for failing to file an FBAR so long as the taxpayer files several years of amended or delinquent tax returns and agrees to pay applicable fines and penalties. Bruer chose to not participate in the OVDP. Instead, Bruer made a “quiet disclosure” by filing several years of delinquent tax returns, but IRS investigators pointed out that even those were false because they did not include any indication of his interest in his foreign bank accounts or the de facto income that he earned from his company.
IRS officials and DOJ prosecutors estimate that Bruer caused a tax loss of at least $2.7 million. His sentencing is scheduled for June. Bruer faces up to five years in prison on each count and will also likely be sentenced to serve a period of supervised release and be required to pay restitution to the IRS.
Getting Ahead of IRS Investigations and Enforcement
This story exemplifies the importance of getting ahead of IRS criminal tax investigation and enforcement actions. If you have failed to file a corporate or individual tax return for one or more years, it is only a matter of time until the IRS discovers your noncompliance and begins an enforcement action. Likewise, if you have filed tax returns, but believe that one or more positions taken on the return may be inaccurate or unsupportable, it is imperative to correct the problem before the IRS audits your return or opens a criminal tax investigation against you.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
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If the IRS has already indicated that they are examining your tax return for one or more years, especially where you have undisclosed foreign accounts and offshore taxable income that was not reported it is critical that you contact an experienced international tax defense attorney to represent you during your interactions with the IRS to prevent the egg shell audit from going criminal. Although most taxpayers believe that they can take on the IRS by themselves, having a seasoned tax attorney on your side can provide invaluable benefits. Your tax attorney will be present during any interaction with the IRS and will ensure that you do not unnecessarily make statements or provide documents that can be used against you later.
It is also imperative that you do not engage the original preparer of the returns where foreign income and foreign information reporting was omitted to represent you. They have their own inherent exposure for aiding and abetting income tax evasion, malpractice and conspiracy and almost guaranteed to bury you with the IRS in an effort to protect their own reputation and to mitigate their own risks of prosecution no matter what they tell you to the contrary.
If you have omitted foreign information reporting but picked up all taxable foreign income or do not believe that you willfully committed income tax evasion or willfully failed to supply required information reporting the Tax Law Offices of David W. Klasing has other options besides a full blow voluntary disclosure to deal with your noncompliance as follows;
Streamlined Voluntary Disclosure – Expat
Streamlined Voluntary Disclosure – Domestic
Delinquent Foreign Information Reporting Program
Contact an Experienced Tax Attorney Today
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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