According to a press release by the Department of Justice, District Court Judge J. Ronnie Greer sentenced David Lee Byrd, 58, and his wife, Paula Ruth Hall Byrd, 58, on tax evasion charges. According to the press release, David and Paula Byrd lived in Frankfurt, Germany during the 2008 tax year and provided computer software consulting to various airlines across Europe. The couple contracted with Practical Business Services LTD, a U.K. entity, to arrange the consulting services that they provided to the airlines.
Department of Justice prosecutors alleged in court documents that Paula Byrd directed compensation for her work (just over $428,000) to a Swiss bank controlled by her husband, David Byrd. Practical Business Services LTD sent the compensation for David’s work (over $500,000) to an American bank account. Only David Byrd’s income was reported as income on the Byrd’s 2008 jointly filed federal income tax return.
The United States taxes its residents on their worldwide income. This means that income earned must be reported on a taxpayer’s yearly tax return regardless of the location that it was earned. Furthermore, federal law requires that residents with foreign bank accounts must report the existence of such bank accounts on a yearly basis.
Paula and David Byrd were investigated because federal authorities received information regarding David’s Swiss bank account, in accordance with the information sharing agreements in force between the U.S. and Switzerland. Federal authorities determined that the Swiss bank account in question was funded with compensation earned by Paula Byrd and that such income had not been reported on the couple’s federal income tax return. The Byrds pleaded guilty to one count of tax evasion each in December of 2016.
As a result of the sentencing, David Byrd will serve 10 months in a federal prison followed by three years of supervised release. Paula Byrd was sentenced to serve four years of probation. Both David and Paula were ordered to pay more than $130,000 in restitution and a criminal fine.
The U.S. government has increased its relationships with foreign governments dramatically over the past several years, when it comes to tax information sharing. Many tax treaties and intergovernmental agreements (IGAs) provided for information sharing. The U.S. State Department and IRS established the Information Data Exchange Service (IDES) that allows foreign governments and banks to electronically send information about U.S. residents’ activities abroad to domestic investigators. If you have a foreign bank account, your account information is at risk for being transmitted to the IRS. Whether nor not your account has been disclosed in accordance with Foreign Bank Account Reporting (FBAR) laws, the activity of your account may wind up in the hands of US tax authorities.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers in a myriad of domestic and international tax predicaments involving unreported foreign and domestic income or non-filed foreign and domestic information returns. From facing a civil examination or a criminal investigation or prosecution, our clients have relied on our zealous advocates to develop an effective strategy to minimize or eliminate the negative consequences that tax trouble can bring about. Don’t lose sleep over the possibility of spending a significant amount of time in a federal prison. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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