by Brian Mahany
Here is a novel case. Nadia Roberts is recently pleaded guilty to knowingly filing a false tax return. According to the charge, Nadia and her husband Sean opened a bank account in the Isle of Man using a nominee name. That account was not disclosed on her tax return nor did she file a required Report of Foreign Bank and Financial Account (“FBAR”). Although her sentencing has been postponed to July, that has not stopped the couple from suing Swiss bank UBS and others for reporting her to the feds.
The case is a bit more complex, of course, but the thrust of their complaint is that UBS helped Americans violate IRS laws by opening secret accounts while at the same time it served up those very same clients by reporting them to the IRS. As stated in the complaint, UBS “not only schemed to defraud U.S. authorities and solicited, offered and induced U.S. clients to conceal offshore assets but UBS AG also anticipated and planned to retaliate against their own clients by creating or posting evidence contrary to the truth…”
The Roberts charges give new meaning to the term “full service bank.”
Obviously, the Roberts were ultimately discovered and prosecuted. In addition to the criminal charges, they also suffered millions of dollars in IRS penalties.
What makes this case interesting are the allegations in the complaint which suggest that the bank was dispensing bad tax advice. Its hard to sue the bank for turning over the names of its American customers. After all, concealing a foreign bank account is a crime. The deliberate misinformation and tax advice charges may have some merit, however.
Nadia and Sean face an uphill battle. How a jury will perceive a couple convicted of filing a false tax return remains to be seen. When growing up, most of us heard the old adage “two wrongs don’t make a right.” That is certainly true here. Assuming the allegations are true, UBS should be held responsible for penalties suffered by their clients IF they provided bad tax advice. Was this just simple greed by the Roberts or did the bank rely deceive them? That remains to be seen.
Other banks named in the complaint include The Bank of N.T. Butterfield & Son (Bahamas), Wegelin & Co and NZB Neue Zurcher Bank.
If you have an unreported foreign bank or brokerage account, the time to come clean is running out. More and more banks are cooperating with U.S. authorities and next year banks worldwide will be required to provide account holder information to the IRS. Presently the IRS is running an amnesty program called the Offshore Voluntary Disclosure Program or OVDI for short. It works on a first contact basis, however.
If you come forward and report your account under amnesty, the IRS will not prosecute you criminally. Failing to report an offshore account is a crime. The amnesty program also provides for greatly reduced penalties. If the IRS finds you first, however, all bets are off. There are more traditional disclosure methods available as well and may be beneficial to taxpayers that can prove their noncompliance with offshore reporting requirements was not willful.
For more information about your options and the OVDI amnesty program, give us a call. Inquiries are kept in strict confidence and subject to the attorney client privilege. For more information contact attorney Bethany Kroes at or attorney Brian Mahany at Need immediate help? Contact Bethany by telephone at (414) 223-0464 or Brian at (414) 704-6731 (direct).
Mahany & Ertl – Giving Taxpayers A Voice. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. IRS legal services available worldwide.