As of late, the main focuses of efforts by the United States government to fight overseas tax evasion have been in Europe, specifically Switzerland. For many years, Swiss banks have been the norm for Americans who have searched for havens to house their undeclared assets. But, as evidenced by the actions of the IRS described below, the target of offshore may be shifting to the new hot tax haven, the Cayman Islands.
Last month, the IRS made several arrests in Miami that stemmed from a yearlong investigation by the Service. The probe involved IRS agents going undercover to gain vital evidence to be used in the prosecution of those arrested. Joshua Van Dyk St-Cyr and Patrick Poulin were charged with conspiracy and money laundering on behalf of U.S. clients attempting to hide money from the U.S. government in the Cayman Islands.
The IRS didn’t disclose if the information used to charge the two men who were arrested. The information was solely obtained by their undercover operations but the IRS did say that they receive information from several sources. The Service has identified whistleblowing as a popular source of incriminating information. But those providing information to the IRS and Department of Justice aren’t just foreign banks attempting to avoid criminal prosecution and hefty fines. The IRS admits that many tips come domestically from everyday citizens who know of others who evade paying taxes by hiding money overseas. U.S. citizens who give up their friends, family or colleagues have an incentive to do so. The Internal Revenue Code has established monetary rewards for those who provide information to the government that results in the collection of additional taxes.
Many Americans are aware that they have the option to voluntarily disclose their undeclared assets and avoid jail-time but choose not to do so, reasoning that their banks wouldn’t release their information to U.S. authorities and if they did, they would warn account holders of the disclosure. What many don’t know is, once the government puts your name on a list as potentially hiding money overseas, you become ineligible to participate in the Offshore Voluntary Disclosure Initiative. Therefore, by the time you have a hunch that the government may have as little as your name, it is probably too late and you can expect an eventual IRS criminal investigation.
So what can you do? If you have money overseas, whether it be in a Swiss bank, the Cayman Islands or elsewhere and you are scared about being discovered and the thought of facing time in federal prison (remember, tax evasion is a felony), your best bet is to meet with a tax professional who is not only a tax attorney, but is a CPA and former auditor. At the Tax Law Offices of David W. Klasing, we can come up with a plan for your unique situation and if it is appropriate, make sure that you take the proper steps to participate in the Offshore Voluntary Disclosure Initiative. But don’t delay; the terms of the OVDI are changing soon. Don’t miss the opportunity to keep your freedom and stay out of federal prison. Contact us today.