For anyone with even a passing interest in taxes or an obligation to file and pay taxes, it should come as no surprise that offshore account reporting duties have received significant attention from Congress, the IRS, and the Department of Justice (DOJ) in recent years. Congress has enacted or strengthened disclosure laws like Foreign Account and Tax Compliance Act (FATCA) and Report of Foreign Bank & Financial Accounts (FBAR). For its part, the IRS and DOJ have worked aggressively to identify and prosecute taxpayers who are believed to be using offshore accounts or offshore trusts to avoid or evade taxes.
The expansion of FATCA through the signing and ratification of corresponding tax information sharing agreements with more than 100 nations means that taxpayers face an extremely high risk of detection if they fail to disclose offshore accounts. Thus, many taxpayers who made unfortunate filing errors in past tax years have taken the prudent step of engaging in one of the IRS’ voluntary disclosure programs. Offshore Voluntary Disclosure and the Streamlined programs can mitigate the consequences faced by a taxpayer, but the taxpayer must come clean about their past acts. In many cases the taxpayer reveals the identity of incorporators and banking officials who facilitated or executed the offshore money laundering operation.
More than 50,000 taxpayers have avoided potentially serious tax charges by engaging in these programs. From this information provided by taxpayers, financial professionals who work in international banking and set-up offshore accounts face a new risk: Your next visit to the United States may actually be a cleverly designed sting operation.
In one high-profile arrest by U.S. authorities, the manager for a Panamanian company engaging in offshore banking operations was lured to the United States along with two business associates for what he believed was a business deal. Rather, Michael Dodd; the manager of High Secured, Kenneth Landgaard; the provider of a private jet, and Robert Shipman Jr; an offshore incorporator were arrested in New York shortly after landing.
Before dismissing the individuals as being careless or arrogant, consider that they did take precautions in a doomed effort to evade detection. The men had insisted that their potential clients only communicate about their deal when using encrypted communications software to prevent the government from listening in on their conversation. Furthermore, the men profiled their clients for signs of wealth – something they assumed the police would be unable to faithfully recreate. They insisted that their clients, who were actually undercover investigators, pack the cash they brought into a high-end Louis Vuitton bag.
The individuals’ company High Secured, claims that it provides offshore web-hosting. Furthermore the company’s website claims that it also provides services related to corporate structure planning and formation and merchant services accounts. The company touts its ability to permit, “individuals and businesses to conduct their financial affairs in a private, secure, reliable, and tax-free environment.” The company was not named in the lawsuit and the accused parties have yet to make a plea. However, all three were denied bail.
The IRS and DOJ are aggressively pursuing leads that seem to indicate or suggest that U.S. taxpayers are engaging in tax evasion or tax fraud through the use of offshore accounts or offshore trusts. Taxpayers who have worked with banks or offshore incorporators who have been identified as participating in or facilitating these types of schemes. Even if the offshore banking specialist you worked with has yet to be identified, the continued disclosures by thousands of Americans under FBAR and FATCA and through the voluntary disclosure programs means that discovery is nearly inevitable. Taxpayers that fail to disclose before their financial institution is identified or implicated face significantly higher penalties when coming back into compliance. Furthermore, if you come under suspicion of engaging in fraudulent or wrongful tax acts, you will be ineligible for the disclosure program and likely to face the full extent of the penalties that can be imposed under U.S. law.
If you have engaged in offshore banking activities as either a taxpayer seeking to minimize the taxes you owe or as an incorporator, you can face serious criminal tax charges. The tax attorneys and tax professionals of the Tax Law Offices of David W. Klasing are experienced and work strategically & aggressively to protect your rights and freedom. To schedule a reduced-rate consultation at our firm call 800-681-1295 today or contact us online to arrange for a consultation.