by Brian Mahany
As the current offshore tax amnesty program (called Offshore Voluntary Disclosure Initiative or OVDI) draws to a close on September 9th, many wonder where the IRS will look next for unreported income and accounts. Everyone agrees that there is no end in sight in the IRS crusade to end offshore tax evasion.
Several years ago UBS and unreported Swiss banks were the big topic. Recently IRS seems to be targeting banks in Israel, India and the Caribbean. And now there is this story – or “non-story.” The U.S. Department of Justice refuses to confirm or deny a tax settlement with the Islamic Investment Company, a bank located in the Bahamas but with direct ties to the royal family in Saudi Arabia.
While the government refuses to verify that prosecutors have signed a non-prosecution agreement with the bank, published reports link the bank to structured real estate transactions designed to help people avoid U.S. taxes. Prosecutors in Boston apparently began an investigation back in 2007.
Because the terms of the agreement are not disclosed, it is unknown how much information Islamic Investment Company and its parent, Dar Al-Maal Al-Islami Trust, or DMI Trust for short, is turning over to the IRS.
Although reports say the bank has links to terrorists through an alleged association with the Muslim Brotherhood and shadowy connections to Hamas and al Qaeda, what makes this case interesting to us is how it came to light. The probe in Islamic Investment and DMI started because 2 whistleblowers came forward in 2004 after they had been fired.
As we often see, a single disgruntled employee is often responsible for a cascade of unintended consequences. One unhappy bank employee can blow the whistle on hundreds or thousands of account holders with unreported foreign accounts, unreported income or participation in abusive tax shelters. It’s simply impossible to know if you will be caught and how.
I have said it before, the world is getting smaller by the day.
If you have unreported foreign income, offshore accounts or a taxpayer living abroad with questions about U.S. taxes, give us a call. Our tax attorneys can assist you with a wide range of tax problems and provide you with both answers and peace of mind. For more information, contact attorney Brian Mahany at (414)704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services performed nationwide.