There is somewhat of an open secret among offshore tax experts that many US person with unreported foreign accounts have either:
- Converted the assets to cash and have placed it into ever-growing safety deposit boxes; or
- Attempted to move the funds to countries less interested in opening up their records to the IRS.
David Voreacos and Giles Broom, writers for Bloomberg News, may have some unsettling news for those attempting such techniques:
U.S. agents interviewed taxpayers who used a Singapore money management firm to hide assets from the IRS, said Bryan Skarlatos and Scott Michel, lawyers who separately represent some of those Americans. They wouldn’t identify the firm, and Ciraolo wouldn’t discuss it.
“Certainly, Singapore would be one of the jurisdictions that we’re looking at,” Ciraolo said.
Additionally, the IRS and Department of Justice are looking at other jurisdictions as well:
Societe Generale SA’s Swiss private banking unit admitted in its settlement that it transferred assets of U.S. customers to “corporate and individual accounts at other banks in Switzerland, Hong Kong, Israel, Lebanon, Liechtenstein and Cyprus,” according to its statement of facts. The unit paid a $17.8 million fine. A bank spokesman declined to comment.
So what to do if you have transferred money from a Swiss account to another foreign account?
The problem for those who have taken active steps to conceal ownership by transferring funds elsewhere is that plausible deniability for non-willfulness may have been lost. This means that there is a very real possibility of 50% offshore penalties or criminal charges as many of these banks end up on the "OVDP Blacklist." While the offshore penalties can be a real sting and threaten your financial well-being, it's the criminal charges that are the most pressing concern.
owever, just because you've had accounts with any of these blacklisted institutions, it doesn't mean that your motives were criminal. We have seen cases where account holders were intentionally kept in the dark about why their funds were being transferred. That is, some bankers and account managers — not wanting to lose commission and fees should the funds be repatriated to the US or properly reported — convinced US account holders to use shell companies to conceal ownership. This happened even though the account holders themselves had no criminal intent to evade taxes or FBAR reporting. The lack of honest communication opens the window to prove that there was no criminal intent on the part of the account-holder. Instead, they were being fed falsified information by morally bankrupt bankers (isn't it funny how that works?).
Offshore disclosure cases are incredibly varied and fact-dependent
Here's the rub on offshore disclosures – there are many shades of gray and a hundred moving parts to each individual case. What makes the difference between a positive resolution and a painful one is finding which combination of grays and moving parts is going to help you the most. To find what your best options are, or even to just find out what your options are, we advise you watch our latest webinar on the most common OVDP questions people ask (recorded September 4, 2015), or contact us now to see if a free consultation with one of our offshore attorneys is the right option for you. Disclosures can be incredibly difficult and overwhelming affairs, and we strongly believe that no one should have to fight through them alone.
