We frequently post stories about both Americans and foreign bankers prosecuted for tax evasion involving unreported offshore accounts. U.S. taxpayers are usually prosecuted for filing a false tax return (a 3 year felony) or failure to file an FBAR (5 years). Bankers, lawyers and accountants associated with these taxpayers are frequently charged with conspiracy to defraud the IRS.
The U.S. Department of Justice likes to target bankers and lawyers. One prosecution can often result in the names of hundreds of clients with unreported accounts. White collar professionals are considered “soft” targets by prosecutors. In lieu of a prison term they will usually cooperate and turn over the names of their clients and customers.
So what are the chances of going to prison for tax evasion? Pretty slim, actually.
Since the IRS offered its first amnesty program in 2009 – the Offshore Voluntary Disclosure Program – 86 taxpayers have been prosecuted. 35 bankers and lawyers were also charged. To date the Justice Department maintains a conviction rate in the high 90th percentile range. If arrested by the feds, you will likely be convicted.
Fortunately, these statistics reveal that few people are actually charged. And often those are charged plead to lighter false return crimes instead of more serious tax evasion charges.
Does that mean those with unreported offshore accounts have little to fear? Absolutely not! The prosecution statistics don’t include the thousands of taxpayers who have been audited and subjected to huge civil penalties.
A tax evasion prosecution can land you in jail but an IRS audit for an unreported offshore account can leave you broke. Penalties can be as high as $100,000 or 50% of the highest account balance for each year an offshore account is unreported. Even an innocent mistake can subject you to penalties of $10,000 per year.
While the risk of going to prison for tax evasion or other crimes is quite low, the chances of getting caught and paying big penalties is very high. Over 38,000 people have come forward since 2009. With each new disclosure, the IRS mines data to determine what banks house these accounts. In larger account cases, the IRS also seeks to learn the names of people who helped set up the account.
If you have an unreported Swiss or other foreign account, read our post FBAR 101 – Critical Information for FBAR Filers. We also suggest that you contact a tax lawyer right away. Although accountants can also help with unreported foreign accounts, they don’t enjoy the attorney – client privilege. That means the IRS can force your accountant to testify against you.
Think you are at risk or already under investigation for tax evasion or unfiled FBARs? Give us a call immediately. Our tax lawyers have helped many taxpayers with a wide variety of criminal tax investigations and offshore tax reporting services including FBAR preparation, FATCA compliance, foreign real estate transactions and more. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence.
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Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California.
Post by Brian Mahany, Esq.