by Brian Mahany
The recent foreign bank account tax amnesty program (the Offshore Voluntary Disclosure Initiative or OVDI) may be over but that only means more indictments from the IRS. This time two bankers from Swiss bank Julius Baer were indicted by a federal grand jury in New York City and charged with conspiracy to defraud the United States.
Prosecutors say former Julius Baer client advisers Daniela Casadei and Fabio Frazzetto helped almost 200 Americans conceal income and assets from the IRS. According to the indictment, the two helped U.S. tapayers open Swiss accounts under code names or in the names of non-U.S. relatives. They also made sure that account statements were not sent to the U.S.
When clients would visit Julius Baer offices, the duo would often provide “traveling statements” that had all identifying information removed from the statement. All of these actions, obviously, are to help their clients hide their income and assets from the IRS.
To date, many of the foreign banks that were the subject of IRS investigations maintained a branch office in the United States. That made it easier for government agents to issue “John Doe” subpoenas or force compliance with investigations. Julius Baer, however, does not operate an office here.
If the indictment is accurate, one client met with Casadei and bank director after reading news reports of the crackdown on unreported Swiss and foreign accounts. The bankers said that because they had no office in the U.S. the bank “was immune” from the issues then plaguing UBS Bank. Obviously Tuesday’s indictment reveals just how false that statement was.
As a result of the recently ended amnesty, treasury agents and justice department officials now have thousands of investigative leads. The IRS asked many people who participated in the OVDI program to disclose the name of their banker and if that banker assisted them with hiding their money. That information is likely to lead to many more indictments of bankers in coming months. And each indictment of a banker will probably bring out the name of many more account holders.
Although the amnesty program is over for good, U.S. taxpayers (including dual nationals, Americans living abroad and U.S. green card holders) still have an obligation to file Reports of Foreign Bank and Financial Accounts (FBAR’s) and disclose any income associated with those offshore accounts. If you have not been filing proper returns, contact an experienced tax attorney. There still remains methods to voluntarily disclose foreign accounts and often receive relief from the otherwise onerous penalties.
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California
By charging the bankers with a felony, most offshore tax experts agree that the Julius Baer and the accused will cooperate. That cooperation most likely includes disclosing the identities of the Americans with hidden accounts.