by Brian Mahany
Earlier this summer, Dr. Arvind Ahuja of Milwaukee was charged with evading federal taxes. In a new indictment unsealed yesterday, the IRS says he did even more illegal things to conceal his foreign bank accounts.
Federal law makes it a felony to fail to report ownership or control of foreign bank or brokerage accounts. The accounts are legal but must be disclosed annually to the IRS on a Report of Foreign Bank and Financial Account or FBAR form. It’s also a felony to not disclose any foreign income on your U.S. tax return. The IRS says Dr. Ahuja is guilty of both.
According to the new indictment, Ahuja opened an account with HSBC India and HSBC Jersey. HSBC is one of the world’s largest banks. Jersey refers to the Bailiwick of Jersey, a semi-autonomous crown dependency located of the coast of France and a popular destination for those trying to hide money. They say that Ahuja opened his accounts through NRI Services, a division of HSBC that provides banking services for customers of Indian descent.
According to the indictment, the feds say that NRI Services actively helped Indians open undeclared accounts. Unfortunately for Ahuja, the feds indicted him and not the bank.
The indictment charges that Ahuja instructed the bank to send statements to an address in India rather than his Wisconsin address. Why? It’s common for people seeking to hide bank accounts to leave no paper trail in the U.S. Prosecutors also say that HSBC provided Ahuja with debit and credit cards to access his funds, another common tactic of offshore tax evaders.
New technology allows the government to track cash withdrawals from ATM machines and track purchases made by credit card. Although his accounts may have been in India, by accessing his funds here in the U.S. with credit cards, Ahuja was leaving a paper trail.
Although all the elements are present for tax evasion, the grand jury indicted Ahuja for failing to file the required FBARs and for filing false returns. Still serious charges.
If you have an unreported offshore bank account or have failed to file FBARs, contact an experienced tax lawyer as soon as possible. Not only does Ahuja face a significant prison sentence, he also risks losing all his foreign bank accounts even if acquitted on the felony charges! How is that possible? The civil penalty for having an unreported account is 50% of the account value for each year in which there is a violation.
The odds of getting caught with an unreported account grow higher every day. Having account statements mailed to a foreign address is considered a “willful” violation by the IRS. More importantly, it is an invitation for a referral for criminal prosecution as well. Trying to hide money overseas and bring it back through use of a credit or debit card is also a nonstarter.
If you have an unreported overseas bank account, contact the tax lawyers at MahanyLaw. We have successfully defended people from IRS criminal tax charges and have helped many dual nationals, Indians living in America and Americans living overseas commit into compliance and avoid prosecution. For a completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at