On April Fool’s Day, with no apparent sense of irony, the Internal Revenue Service (IRS) filed a criminal tax complaint against Steven Michael Rubinstein, an accountant, but apparently not a Certified Public Accountant (CPA), charging him with one count of filing a false tax return pursuant to Internal Revenue Code Section 7206(1). According to the criminal complaint, Rubinstein failed to disclose that he had an interest in, or signatory authority over UBS Swiss bank accounts. Apparently this is the first criminal tax fraud case the IRS has filed involving a UBS Swiss bank account holder.
As readers of this blog know, holders of offshore bank accounts with a balance of over $10,000 are required to disclose the existence of the account on Form 1040, Schedule B. In addition, owners of such accounts must file a Form 90.22-1 (aka an FBAR) separate from the tax return. Failure to file an FBAR is a separate crime. Rubinstein’s name was turned over to the IRS by UBS pursuant to the deferred prosecution agreement that it entered into with the IRS. Although only the 2007 tax year was charged, according to the criminal complaint, Rubinstein had a Swiss bank account at least since 2001. The complaint does not indicate whether or not Rubinstein failed to declare income, other than the income generated by the Swiss Bank account itself. However, at some point there was at least $3 million in the offshore bank accounts, and perhaps more.
The filing of the tax fraud charges illustrates the potential dangers of waiting too long to file a voluntary disclosure with the IRS. According to an article in the New York Times by LYNNLEY BROWNING there are 100 open tax fraud investigations in the UBS matter.