From the Tax Law Offices of David W. Klasing - Florida Man Sentenced for Tax Evasion

IRVINE, Calif.,  April 18, 2023 /PRNewswire/ -- According to a Department of Justice press release, a Florida man was recently sentenced to serve two years in federal prison after being convicted of evading taxes of millions of dollars hidden in offshore financial accounts. The Treasury Department has made it known that taxpayers who engage in tax evasion by utilizing undisclosed overseas bank & financial accounts & unreported offshore income generating assets and businesses will be investigated and prosecuted. If you have an ownership interest in or signature authority over one or more foreign financial accounts and have not reported such interest on an annual basis, especially where you have evaded reportable taxable offshore income you are at high risk for criminal offshore tax and information reporting violations. We can work to mitigate this risk to practically zero if you are willing to reach out to the IRS before they reach out to you.

Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process.  Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth.   See our Testimonials to see what our clients have to say about us!

Defendant Hid Millions Offshore, Failed to Comply with FBAR Laws 

This posting serves as an update to a blog posting that we previously brought our readers. If you recall from our post early last year, a Lake Worth, Florida resident pleaded guilty in early 2020 to several criminal tax-related counts that stemmed from his actions in his role as owner and operator of an agricultural machinery company. His company focused on buying machinery and parts and selling them to buyers inside and outside the United States.

Although he did not draw a salary from the company, he did extensively use the business bank accounts to pay for his lavish lifestyle. Some of his expenses included the purchase of a yacht, the purchase of several homes, and the acquisition of other real property in Serbia. Prosecutors alleged that between 2007 and 2011, He transferred more than $5.8 million of company profits to bank accounts in foreign countries. From 2007 through 2014, the defendant was responsible for the company's failure to pay any corporate tax, despite its more than $7.7 million in income. Additionally, he or the company never filed employment tax returns or paid over the associated payroll tax.

Federal authorities also asserted that he had various foreign bank accounts that went unreported. Federal law requires that bank accounts at foreign financial institutions with a combined high balance of $10,000 or more at any point in the year must be disclosed on a Report of Foreign Bank or Financial Account (FBAR). Prosecutors asserted that although he knew of his legal obligation to file an FBAR, he willfully failed to do so, which is a separate felony.

In 2015, his Swiss bank closed his account and suggested that he enter into the IRS Offshore Voluntary Disclosure Program (OVDP). The OVDP allows taxpayers to avoid criminal prosecution for failing to file an FBAR so long as the taxpayer files several years of amended or delinquent tax returns and agrees to pay applicable fines and penalties. He chose to not participate in the OVDP. Instead, he made a "quiet disclosure" by filing several years of delinquent tax returns, but IRS investigators pointed out that even those were false because they did not include any indication of his interest in his foreign bank accounts or the de facto income that he earned from his company.

IRS officials and DOJ prosecutors estimate that he caused a tax loss of at least $2.7 million. In addition to being sentenced to 24 months in federal prison, he was also ordered to serve two years of supervised release to commence upon the completion of his physical incarceration. Additionally, he was ordered to pay restitution to the IRS of $1,789,538, representing the tax loss that he caused.

Understanding and Coming into Compliance with FBAR Laws

Federal law requires Americans to disclose the existence of any foreign bank accounts under the Foreign Bank Account Reporting (FBAR) regime. FBAR requirements entail providing basic information about your foreign bank account to the U.S. government. Only bank accounts with a high balance of $10,000 or more are required to report under the regime. For those who fail to comply with the FBAR regime, the results can be rather draconian. Willful failure to file an FBAR can result in criminal prosecution and a penalty of up to half of the high balance of the account for each year of noncompliance.

Many Americans with undisclosed accounts commonly justify their FBAR noncompliance by questioning the ability of the U.S. government to discover their hidden bank & financial accounts and associated offshore evaded taxable investment or business income. But over the past 10 years, the federal government's ability to detect secret foreign bank accounts has skyrocketed. The U.S. frequently works with foreign banks and governments to uncover American tax evaders via reciprocal information sharing agreements and FACTA to tie U.S. tax residents to offshore financial accounts and income generating investments and businesses that have not been reported for income tax or foreign information reporting purposes.

If you have foreign bank & financial accounts and have failed to report their existence for one or more years, it is in your best interest to contact an experienced FBAR defense attorney to determine how to bring you into compliance without facing criminal prosecution. With IRS offshore focused audits increasing and diplomatic efforts to share information across countries strengthening, it is only a matter of time until your hidden bank or financial account along with its evaded reportable taxable income is uncovered.

If you find yourself under audit with undisclosed foreign account(s) you need us much more than you could possibly imagine to keep the issue from going criminal via and eggshell or reverse egg shell audit.

We Are Here for You

Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

In addition to our main office in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC