by Brian Mahany
Earlier this spring we outlined several stories of the IRS crackdown on American taxpayers with undeclared bank accounts at HSBC India. U.S. law requires taxpayers to disclose foreign accounts if at any time the account value exceeds $10,000 and recently the government has commenced a sweeping crackdown on those who don’t comply. New information from a feature article in Moneylife magazine sheds light on HSBC’s shocking conduct.
The IRS has moved well beyond rich Americans with secret bank accounts in Switzerland. Currently the feds are looking at dual nationals and Americans with undisclosed accounts in any foreign country, including India. Unlike Swiss accounts which are often intentionally opened with the hope of evading taxes, many foreign born and dual nationals maintain accounts in their “home” country. The Canadian who sends money back to Toronto or the Indian who opens a second account in their native country often don’t know they are breaking the law.
According to Moneylife magazine, Vaibhav Dahake, a native of India who became a US citizen in 2006 and recently pleaded guilty to having an unreported foreign account, was coaxed into the crime by HSBC India.
Dahake maintains that he was approached by an HSBC affiliate in New York. Once he opened his account, HSBC bankers told him he did not have to supply his tax id number and didn’t have to “fill out any declaration forms.” Obviously false statements.
Bankers also told him to convert US dollars into foreign currencies before wiring it to India.
As I indicated previously, there are hundreds of thousands of US taxpayers who haven’t reported their foreign accounts. The penalties for not reporting a foreign bank account of more than $10,000 include prison, a felony record and forfeiture of 1/2 the highest balance in the account.
There is some good news. Taxpayers can take advantage of a last chance tax amnesty program, called the Offshore Voluntary Disclosure Initiative, that is going on through August. Amnesty participants can avoid criminal prosecution and much of the civil penalties.
Participating in the amnesty program isn’t easy and all payments, amended returns and disclosures must be complete by August 31st. Depending on where the required bank records are – the feds want almost a decade’s worth – it could take weeks to complete the paperwork meaning that waiting until the last minute won’t protect you.
Mahany & Ertl is a full service law firm concentrating in tax resolution, civil fraud and white collar criminal cases. We can help you quickly take advantage of the foreign bank account amnesty program and save thousands or more. For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services nationwide.