It seems that every week, we bring you stories about United States taxpayers that have been charged with hiding money in foreign bank accounts. As of recently, taxpayers have, for the most part, shifted away from storing their money in Swiss banks. This is, in large part, due to the major crackdown of Swiss banks in an attempt by the U.S. to destroy any type of secrecy arrangements that foreign institutions may have with their customers. But alas, all of the news about prosecutions and IRS criminal investigations over stashing money in Swiss institutions doesn’t deter everyone.
According to court documents, Gregg A. Kaminsky, an Atlanta web entrepreneur, was charged in a federal case relating to the failure to file an FBAR disclosing his overseas account. The government alleges that as of 2006, Kaminsky had a Swiss account with a balance of over $1.1 million. The money was apparently transferred into the Swiss account via transactions involving other overseas accounts in Hong Kong and Thailand.
It should be noted that Kaminsky’s bank of choice was allegedly UBS, the Swiss bank that agreed to pay an enormous settlement to avoid criminal prosecution back in 2009. The agreement between UBS and the Department of Justice provided the framework for the non-prosecution program that was set up and widely utilized by Swiss banks in the past few years. Under the terms of the program, the foreign banks agreed to comply with the demands of the Justice Department in exchange for protection against criminal charges. The DOJ recently called upon the banks partaking in the program to provide all of the information available with regards to their American customers.
The Swiss non-prosecution program coupled with the recent implementation of the Foreign Account Tax Compliance Act has overseas banks lining up to avoid the iron fist of the U.S. government. It is not a good time to be an American with an undeclared account, overseas. You are essentially a sitting duck and every day that you fail to take action is a day closer to the IRS finding you out and referring your case to the Criminal Investigations Division.
Mr. Kaminsky faces not only criminal, but also civil ramifications. In addition to fines of up to $250,000 and five years in prison, he is also facing a penalty of up to 50 percent of the highest balance of the account for each year that the account went unreported. Tax experts have called this regime of punishment draconian, in that the amount owed by the taxpayer can easily exceed two or three times the amount of the undisclosed account. Though the United States doesn’t seem to mind how harsh the consequences are. In the end, they have been working.
All of this could probably have been avoided had Mr. Kaminsky participated in the Offshore Voluntary Disclosure Program. The OVDP was set up by the IRS to provide a streamlined way for taxpayers to come clean with the government and face only minimal penalties. In exchange for fessing up, the taxpayer will not face any criminal penalties and will likely only pay a small percentage of the penalties that they would otherwise be subject to. But because the program was set up by the IRS as a matter of administrative grace, it could be changed or cancelled at any time. Further, if the IRS finds out about your offshore account before you enter into the program, you will be unable to participate and face the full extent of the potential consequences, including a federal prison sentence.
The tax professionals at the Tax Law Offices of David W. Klasing have years of experience assisting taxpayers with undisclosed foreign accounts participate in the OVDP program. Further, if you are already in trouble with the IRS, we also have extensive experience in representing taxpayers in IRS audits and criminal investigations. When your freedom is in jeopardy, it’s better to be safe than sorry. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation at (800) 681-1295.