by Brian Mahany
We hear of many people making claims against their tax preparers for not properly advising them of their foreign account reporting requirements. Lately some taxpayers are suing Swiss banks for allegedly providing them bad advise – like, “don’t worry you won’t get caught.” Now in what may be the ultimate lawsuit, billionaire Igor Olenicoff is suing Swiss banking giant UBS claiming that they didn’t tell him that his $200 million Swiss account needed to be reported to the IRS.
Olenicoff was caught by the IRS and ultimately pleaded guilty to a criminal tax charge. He was also forced to pay $52 million in penalties to the IRS. Now he hopes to get back that money plus a whole lot more from UBS.
Olenicoff says a UBS banker told him his Swiss account would not be subject to IRS reporting requirements. The bank, of course, says it never told him “to lie on his tax returns.” It’s hard to predict what will happen in court. Both parties are well represented in the litigation.
Although we have absolutely no inside knowledge of the case – we are limited to what appears in the media and court filings – it’s hard to imagine a billionaire with $200 million in a foreign bank account not having a great CPA or tax attorney to do his returns. Is it the bank’s responsibility to provide him tax advice? That question is one of several soon to be addressed by the court.
Tax preparers do make mistakes. We don’t see a billionaire doing his taxes with some free downloaded software or relying upon the folks who set up a sign on the street corner offering tax return preparation for $39.99, however. Pleading guilty to criminal tax charges can’t help one’s case either. Many believe that Olenicoff simply is upset that he got caught.
The stakes are high in this case. Olenicoff is reportedly seeking well over a billion dollars from UBS.
If you lost money from bad investment advice or if a tax preparer / tax attorney provided you improper tax advice, you may have a claim. CPA’s, lawyers and even most tax preparation services have a basic understanding of the fundamentals of foreign bank accounts and FBAR filings. Using a street corner preparer, however, puts you at much greater risk.
First, CPAs and tax lawyers have the greatest amount of training. Although tax preparers are required to have minimal competency testing beginning this year, the quality of their training is almost always much less. But that’s not the only reason.
Not only are your chances of a costly mistake much lower by using a CPA or tax lawyer when foreign accounts are involved, most professionals carry malpractice insurance. There is a “deep pocket” to pay any IRS penalties in the unlikely event one does fail to file an FBAR or provides bad advice. Ordinary preparers, however, don’t often carry insurance.
If you have questions on offshore reporting including FATCA, FBARs and the current offshore tax amnesty program (2012 Offshore Voluntary Disclosure Program), give us a call. Our tax attorneys concentrate in foreign accounts and have represented many dual nationals, foreign citizens with work visas and Americans holding foreign bank and brokerage accounts. For more information, contact attorney Brian Mahany at (direct) or by email at . All inquiries are protected by the attorney client privilege and kept in strict confidence.
Mahany & Ertl – Giving Taxpayers A Voice. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. IRS services available worldwide.