by Brian Mahany
When the IRS came knocking on UBS’ door a couple years ago, U.S. customers with unreported offshore accounts didn’t have too many options. Although some decided to transfer their unreported money to yet another Swiss or foreign account, the recent increase of IRS criminal prosecutions suggests that Uncle Sam is winning the war. In an unusual twist, one convicted tax evader is suing UBS for telling him that he did not have to report his offshore account. He is not alone.
Two others have also filed suits against UBS. Himanshu Patel of Arizona and Matthew Thomas of California sued UBS. They say that the Swiss banking giant began recruiting thousands of American clients beginning in 1996. Customers were told they need not report their offshore accounts to the IRS. (The bank denies the allegations.)
The complaint says to avoid compliance with government regulations, UBS assisted taxpayers setting up foreign corporate entities to “own” the Swiss accounts.
The penalties charged by the IRS on unreported foreign bank and brokerage accounts can be 50% of the high balance for each year an account is not properly disclosed. We have seen several cases where CPAs and tax preparers have been held responsible for the fines and penalties caused by the failure to report (offshore accounts are reported by an annual Report of Foreign Bank and Financial Account or “FBAR”). The cases now heading to trial mark the latest battlefield – taxpayers suing their former bank for bad advice.
The stakes are certainly high. There are hundreds of thousands of unreported foreign accounts and billions in penalties have already been collected.
If you were assessed penalties by the IRS for an unreported offshore account or if you had to pay penalties through the IRS amnesty program (OVDP or OVDI), you may be able to reclaim some of those penalties.
The tax and fraud lawyers at Mahany & Ertl have helped many taxpayers with unreported foreign accounts. We can help you come into compliance and get back your money from those responsible. For a completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Tax and Fraud Recovery Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. IRS tax services available worldwide.