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Guilty Plea in Offshore Bank Account Case

A frequent topic of this blog is the handling of offshore bank accounts. Specifically, post after post has included warnings about the dangers of failing to report offshore accounts. The penalties for non-reporting are some of the most severe in all of tax law. What is more, in recent years the federal government has made a concerted effort to root out tax revenue from all possible sources, and one source that is perceived as ripe for the picking is unreported assets held in offshore bank accounts.

With that background, it is no surprise that the Justice Department revealed recently that it has concluded a criminal investigation of a venture capitalist who was found to be hiding assets offshore. The defendant entered a plea agreement, but could still face five years in prison and a $250,000 fine, not including back taxes and penalties on the unreported funds.

The plea agreement says that the defendant had an account with HSBC Bank Bermuda from 2003 to 2008. In 2006, the defendant diverted income from an investment to a business partner's Swiss bank account at UBS AG. Then the defendant's share of the investment income (almost $100,000) was wired to the HSBC account in Bermuda. The money wired to Bermuda was taxable income, and the defendant knew it, but he did not report it. According to the U.S. government, taxes on the income and interest earned from it would have been over $40,000. None of the tax was paid.

Orange County tax attorneys remind all their clients that American taxpayers must report offshore assets on their tax return, and file a Report of Foreign Bank and Financial Accounts (or FBAR), with the Treasury Department. The FBAR for the tax year is due by June 30th of the following year.

Source: U.S. Department of Justice "BANK DIRECTOR CHARGED WITH HIDING FOREIGN ASSETS" 5/19/2011

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