by Brian Mahany
Richard McCoy probably spent the last few days on the outside looking in. That’s because the IRS seized his home outside Pittsburgh. According to the Pittsburgh Tribune Review, the home is due to be auctioned next week.
McCoy’s problem started in 2001 after the feds prosecuted him for hiding $900,000 in income in the Cayman Islands. McCoy was ultimately sentenced to serve 18 months in a federal prison for his crime. Unfortunately, that was just the beginning of his problems.
Unable to pay taxes while serving his sentence, interest and penalties continued to mount. What started as $900,000 in unreported offshore income ultimately became a multi million dollar assessment. 10 years later, McCoy, age 68, now owes over $4 million.
McCoy didn’t think the feds would take the family home because he owns the home jointly with his wife. McCoy was wrong. Even though McCoy’s wife was never implicated in the crime, she did sign one of the tax returns in questions and that was enough for the IRS.
McCoy and his wife have owned and lived in the home since 1992. He claims that efforts to work out a payment plan with the feds have failed.
How did MCoy get caught? An official at the bank in Grand Cayman, Guardian Bank & Trust, agreed to cooperate with US authorities. Not much has changed in the last 10 years except many more banks are now cooperating with the IRS.
This appears to be the first reported instance where the IRS has seized a family home to satisfy taxes assessed in connection with unreported foreign accounts. It probably won’t be the last.
If you have an account in another country – even if the other country is your home or you maintain dual citizenship – chances are likely that you must file an annual Report of Foreign Bank and Financial Accounts (the FBAR). Failing to file the FBAR is a felony and the government can seize half (50%) of the historical high balance in that account. FBAR’s are due June 30th. There is presently an amnesty program (offshore voluntary disclosure initiative) that runs through August 31st. The amnesty is a great way to drastically reduce penalties and avoid jail.
Have questions about an offshore account? Contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services nationwide.