by Brian Mahany
I am not sure what is worse – getting caught by the IRS and going to jail for 5 years or incurring the wrath of a woman scorned. Dr. Michael Brandner will soon find out the hard way. According to an article published in panama-guide.com, Brandner was caught after IRS special agents recorded conversations between he and his Panamanian financial advisor.
According to published reports, the Alaskan surgeon drove to Panama with $3.25 million in cashiers checks. Once there he opened an account at Capital Bank. Later he added more money and ultimately tried to hide $4.6 million from his wife.
Although opening a foreign account isn’t illegal, but failing to file annual FBAR forms (Report of Foreign Bank and Financial Account) is a felony. Apparently, the “good doctor” wanted to cheat both the IRS and his wife – he was going through a divorce at the time.
The article doesn’t say what happened to Dr. Brandner but its usually not good once the IRS finds someone with an unreported offshore account. Civil penalties run up to 50% of the high account balance for each year the account was unreported and willful offenders can go to prison for 5 years.
Expats in Panama are especially at risk. With 10 resident IRS agents now stationed in country, the risks of getting caught are high.
Expats in Panama aren’t the only ones at risk. Many of our clients send money home to family in India, Europe and China. Often our clients are dual nationals, foreign born Americans or greencard holders. With the new bank FATCA regulations coming on line and a number of new tax exchange agreements, the days of bank secrecy are nearing extinction.
Whether an unreported foreign account or income was intentional or not, there is still hope. The IRS is currently running an amnesty called the 2012 Offshore Voluntary Disclosure Program or “OVDI.” Participation involves payment of reduced penalties and a “get out of jail” card. Taxpayers who can demonstrate that their actions weren’t willful or holders of small accounts may qualify for a better deal.
The time for coming into compliance is running out. The IRS operates on a first contact policy – if they find you first then no amnesty is available.
If you have unreported offshore accounts, failed to file FBARs or have not declared foreign source income, give us a call. The tax lawyers at Mahany & Ertl concentrate in offshore tax reporting and have helped many taxpayers with FATCA, FBAR, OVDI, voluntary disclosures and criminal tax investigations.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. IRS services worldwide.
* Hat tip to Don Winner at www.panama-guide.com for the story info.