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Surprising data on sentences in offshore tax evasion cases

For better or for worse, the severity of offenses in the U.S. justice system is typically measured in sentence lengths. The more serious the crime, the longer the sentence tends to be.

By that measure, tax evasion offenses related to foreign accounts do not seem to be as serious in the eyes of sentencing judges as many other types of tax crimes. The comparative data on such sentences is of interest to taxpayers in California and across the country who are concerned about foreign offshore account compliance.

The source of the comparative data is a former lawyer for the U.S. Justice Department by the name of Jack Townsend. He has found that sentence lengths in offshore account cases are only about half the length of those in other tax cases.

This finding comes as a surprise to many observers. It's a surprise because the federal crackdown on offshore accounts has been very high profile for the last four years.

To be sure, there have been numerous prosecutions for offenses involving foreign accounts. Since 2009, there have been more than 70 taxpayers charged with tax offenses relating to offshore compliance.

The average sentence length, however, has been less than 15 months in offshore tax evasion cases. This compares to about 30 months in other types of criminal tax cases involving tax-shelter abuses.

There are probably many reasons for the seeming disparity between offshore and other sentences. One reason is certainly the success of partial amnesty programs such as the Offshore Voluntary Disclosure Initiative (OVDI).

The premise of such programs, after all, is to offer incentives for taxpayers to participate. And in cases where there are allegations of tax evasion, those incentives could include lighter sentences.

Please visit our page on tax crime defense.

Source: "Leniency for Offshore Cheats," The Wall Street Journal, Laura Saunders, 5-5-13

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