Three former employees of United Revenue Service, Inc., a company providing tax preparation services, have been indicted by the Internal Revenue Service and the Justice Department for allegedly aiding U.S. clients evade taxes through offshore bank accounts. United Revenue Service had a number of offices here in Southern California and it currently operates 12 branches across the country.
In the indictment, the government alleged that the three men placed an unspecified amount of client funds into accounts at two Israeli banks. In addition, the men allegedly filed fraudulent returns on their clients' behalf. The indictment only went so far as to state that the banks' primary locations were in Tel Aviv, but stopped short of giving their names. The accounts in question, however, were located in the banks' branches in Switzerland and Luxembourg.
One tax attorney suggested that the IRS gathered the information in the indictment from taxpayers who admitted, in exchange for amnesty, to keeping assets sheltered from taxation in overseas accounts. He argued that the government could collect enough information to go after the banks themselves, who would then have an incentive to disclose the names of U.S. account holders, much like Swiss bank UBS did. The IRS received account information on over 4,000 clients from that bank.
Last week we mentioned the IRS's scrutiny of accounts held in a Liechtenstein bank. An indictment related to far afield Israeli banks is perhaps the most convincing evidence to date that the government is committed to pursuing offshore tax evasion anywhere in the world.
Some California residents with offshore accounts may find themselves the target of an IRS investigation. It is vitally important to know one's legal options for disputing taxes owed and repaying delinquent amounts. In addition, remaining current with all of the complicated reporting requirements is essential. The deadline for taxpayers to submit a Foreign Bank Account Report, which informs the IRS of a person's overseas accounts, is at the end of this month.
Source: The Wall Street Journal, "Israeli Tax Preparers Snared," Laura Saunders, June 17, 2012.