by Brian Mahany
The IRS and U.S. Department of Justice have indicted another American for failing to report offshore accounts. A federal grand jury in Fort Lauderdale this week indicted Amir Zavieh for conspiracy to defraud the United States. Zavieh is a U.S. citizen born in Iran.
Prosecutors say Zavieh opened an account at UBS and never filed the required Report or Foreign Bank and Financial Account or “FBAR.” Having a foreign bank or brokerage account is completely legal as long as it is properly reported and taxes paid on any income.
The criminal complaint says that Zavieh opened his account in 1989 at a local UBS office. In 2008 after UBS came under intense scrutiny by the U.S., Zavieh reportedly transferred his account to another Swiss Bank, Cantonal Bank. Of course, he continued to fail to disclose the account or pay tax on the reported $30,000 yearly income generated by the account.
If there is any doubt as to Zavieh’s intent in transferring his account, prosecutors say they found an email in which he says, “At some point in time IF they come after me, I will fight it tooth and nail. What is also interesting or perhaps appalling is that if the laws of a country and its tradition is being broken to save a bank’s ass for selling out its own clients who have been trusting and feeding them for years.”
Zavieh may have a point but fails to remember that he didn’t pay taxes on any of his interest earnings.
What Zavieh discovered is the same lesson learned by thousand of account holders. Foreign bankers ultimately do cooperate with US authorities more times than not. By focusing on the banks and individual bankers, the IRS has been able to obtain the identities of thousands of account holders.
Many foreign account are unaware of the reporting requirements. Others wrongly believe that offshore accounts are exempt from taxation and reporting unless the money is brought into the U.S. These folks may not have the requisite criminal intent for prosecution and may be innocent (although they are still liable for huge civil penalties and fines). Sending emails that discuss what might happen “IF they come after me” and moving your account to yet another offshore bank once an investigation begins spell big trouble ahead, however.
Although the IRS’ offshore amnesty program (OVDI) has ended, there are still ways of coming into compliance and avoiding criminal prosecution. In many cases, persons who can demonstrate they did not act willfully can also get a break on the huge penalties that the IRS may seek to impose – penalties that are up to 50% of the high balance of the account for each year in which the account was not disclosed.
Many people remain sitting on the fence wondering if they will get caught. We believe for most people with unreported offshore accounts it’s more a question of WHEN you will get caught, not IF.
The tax attorneys at Mahany & Ertl have helped people across the U.S. and the world come into compliance with U.S. offshore reporting requirements. If you questions, concerns or are simply unsure what to do, give us a call. All calls are completely confidential. For more information contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services available anywhere.