July 2010 Archives

Credit Suisse Next on the FBAR Tax Fraud Hit List?

July 16, 2010,

Credit Suisse’s offices in Germany were raided by German tax officials looking for evidence of tax fraud. According to an article by Judy Dempsey in the New York Times all 13 German branches of Swiss bank Credit Suisse were searched, and it would take weeks for German tax officials to review the seized documents. One can expect that the IRS is watching this development very closely hoping to find evidence of tax evasion, and failure to file Foreign Bank Account Reports, TDF 90-22.1 (FBARs), by U.S. citizens and residents.

It wouldn’t surprise me if the IRS were preparing to file a lawsuit against Credit Suisse similar to the one filed against UBS in the hopes of getting the names of U.S. citizens suspected of tax evasion and failure to file FBARs. If the German tax prosecutors have evidence of tax fraud committed by Credit Suisse bankers, this would add fodder to any lawsuit by the IRS.

As I keep explaining to clients with offshore bank accounts, the FBAR problem is not going away, and it’s a mistake to think that the IRS investigation of offshore financial is limited to UBS, or even Switzerland.

If you would like a consultation regarding how to handle your unreported offshore bank account, or any other tax problem contact the tax litigation lawyers at Brager Tax Law Group.

IRS FBAR Net (Noose?) Tightens to Include Offshore Bank Accounts at HSBC

July 12, 2010,

In February I noted that two clients with offshore bank accounts at HSBC had been indicted for FBAR (Foreign Bank Account Report) violations and related tax evasion charges. Last week Clare Baldwin reported through Reuters news service that some tax attorneys had been contacted regarding their clients’ undisclosed foreign bank accounts held at HSBC. Apparently letters had come from Department of Justice prosecutor Kevin Downing who has been taking the lead in FBAR prosecutions notifying the tax lawyers that their clients were the target of a criminal tax investigation by the IRS. HSBC moved quickly to distance itself from its clients. A spokesman for HSBC was quoted in the same Reuters article as saying that HSBC “fully supports government moves for appropriate disclosure by its citizens" and "does not condone or assist tax evasion.”

A few days ago Lynnley Browning of the New York Times quoted anonymous sources that;

At least two American clients of HSBC, which is based in London, are aiding federal prosecutors by turning over account details, names of bankers and internal memorandums and other confidential documents regarding HSBC’s offshore private bank, according to one person briefed on the matter.

If the UBS criminal tax prosecution is any guide, this means that over the course of the coming months HSBC will be handing over its clients’ names and account records to the IRS ; at which point they will face the prospect of tax evasion charges, and stiff civil penalties which can range to more than 50% of the balance in the offshore bank accounts.

Clients who have foreign bank accounts at HSBC may still be able to avoid criminal tax evasion charges by taking advantage of the IRS voluntary disclosure policy, and coming forward, but it is clear that time is running out.

If you would like to consult with an experienced tax litigation attorney regarding FBARs, voluntary disclosure, or other tax problems contact the tax lawyers at Brager Tax Law Group, A P.C.

Age is No Bar to Offshore Bank Account Prosecution

July 1, 2010,

Failure to file a Foreign Bank Account Report (FBAR) on TDF 90-22.1 is crime under the Bank Secrecy Act punishable by up to 5 years in jail. Failure to file an FBAR usually goes hand in hand with tax fraud, and other tax problems. There is a common belief that if a person is a senior citizen he is safe from criminal prosecution. While that may have been true in the past, current FBAR and tax evasion prosecutions are breaking that pattern. Seventy six year old Leonid Zaltsberg pled guilty to charges of tax evasion and failing to file an FBAR on July 1, 2010. According to news reports he failed to report $60,000 in income over a six year period on an account with a maximum balance of $2.6 million.

Just in case you read that too quickly let me repeat. Over a six year period Zaltsberg, age 76, failed to report $60,000; that’s $10,000 per year! Granted it’s not pocket change, but we’re hardly talking about a big-time tax evader. According to his daughter as reported by David Voreacos, in Bloomberg News Zaltsberg has bladder and prostate cancer.

This case is a stark reminder to tax lawyers, and CPAs that they can not assume that because the amount of unreported tax is relative small their clients do not have criminal tax exposure. Clients need to be informed of the risks, and the way those risks can be minimized through a voluntary disclosure.

If you have a Swiss bank account, a Hong Kong bank account, or a foreign bank account in any country, and would like to discuss your options, contact the tax litigation lawyers at Brager Tax Law Group, A P.C.