by Brian Mahany
Now that we are into July, the telephone rings constantly. More and more people that have been sitting on the fence are coming in to see if they are candidates for the voluntary disclosure program. For some, its a last chance to avoid paying a whopping 50% asset penalty. For others, their remedy may be a simple as filing some missing FBAR’s (Report of Foreign Bank and Financial Accounts). Why are s0 many people finally deciding to come forward? Because the IRS and Department of Justice have been relentless in their enforcement efforts.
One of the newer targets seems to be Bank Leumi of Israel. The bank claims it is aware of no investigation regarding its account holders, but one Miami lawyer with ties to the on-going investigation of offshore banks says the US has obtained information about US taxpayers with unreported accounts at Bank Leumi.
Although U.S. authorities generally don’t advertise who they are investigating, a recent indictment of a Credit Suisse banker by the justice department suggests that at least one Swiss banker may have come clean and told prosecutors about helping Americans move their money from Switzerland to Israel.
How the U.S. received the information is not really important. Once the IRS believes that a foreign bank holds unreported accounts for Americans, the government can seek to compel Bank Leumi and other banks to disclose the names of its account holders. At least one news source says that another Israeli bank is also on the IRS’ radar these days, Bank Hapoalim.
What does this means for Americans with accounts at Bank Leumi, Bank Hapoalim or other Israeli banks? Nothing if the account has been properly reported to the feds. Each year U.S. account holders must file an FBAR form with the Treasury Department. If any interest income was received on the account, that interest must be reported on Schedule B and the offshore account disclosed on the income tax form as well. Failure to perform either of these disclosures could be a felony criminal offense punishable by prison.
If no interest was received or interest was received and properly reported, the process of coming into compliance on the reporting of the account itself is fairly straightforward. If neither interest nor the account was disclosed, the steps are a bit more involved.
There is an amnesty that runs through August (IRS Offshore Voluntary Disclosure Initiative or “OVDI”). Those with unreported accounts can avoid loss of 50% of the historic high balance of their offshore accounts and avoid possible criminal prosecution.
If you have an unreported account or unreported foreign source income, seek professional guidance. Not all CPA’s or tax lawyers are knowledgeable about foreign reporting requirements.
Mahany & Ertl is a full service boutique law firm concentrating in tax resolution and fraud cases. We can assist with amnesty, FBAR filings, audit defense and criminal tax investigations. For a completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 or by email at
Mahany & Ertl, LLC – America’s tax lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine and San Francisco, California (coming soon). Services nationwide.