Secret meetings, encrypted laptops and nominee Swiss accounts… something from a spy movie? No! It’s some of the things the government says former Swiss banker Raoul Weil did to avoid detection and prosecution.
In October, we last reported about Weil, former number 3 banker at Swiss banking giant UBS. Indicted in 2008, Weil successfully avoided authorities until arrested in Italy last October. Since then he was extradited back to the United States and is now facing a felony conspiracy charge for his alleged role in helping American evade taxes by setting up secret Swiss accounts.
After being arrested and ultimately returned to the United States, Weil was released on $9 million bail, $4 million of which had to be posted in cash. He also had to surrender his passport meaning he can’t easily flee and return to Switzerland.
On Tuesday, Weil was arraigned and pleaded not guilty. His trial is scheduled to begin on February 18th and last 2 weeks.
The Justice Department and IRS continue to focus efforts on foreign bankers who have helped Americans open foreign accounts. While opening or maintaining an offshore account is completely legal, not reporting that account can be a felony.
Taxpayers having more than $10,000 in foreign financial accounts must file a Report of Foreign Bank and Financial Accounts or “FBAR” form annually. Although the chances of being criminally prosecuted for an unreported account are slim, expect the IRS to impose huge civil penalties if caught.
The government has focused on bankers because they will often cooperate with the Justice Department when faced with prison. The IRS likes going after bankers because just one can often serve up hundreds of clients with offshore accounts.
Today it is not uncommon for taxpayers enrolled in the IRS’ offshore amnesty program to be questioned about their banking, accounting and legal relationships. Why? The IRS wants the bankers, accountants and lawyers who helped clients set up nominee entities and their foreign accounts.
Whether Weil is acquitted, convicted or cuts a deal isn’t the point. What matters is the seriousness the government applies to unreported foreign account cases. Indicted in 2008, the feds waited 5 years and brought him back from Italy. The IRS and Justice Department have a long memory and aren’t likely to forget after a few years.
What does this mean for the average taxpayer? Nominee accounts (accounts in a fictitious name), elaborate safeguards to avoid detection and placing your money in a bank that promises to never reveal its customer base doesn’t work anymore. Worse, the IRS considers these very actions to be affirmative acts of tax evasion.
If you have unfiled FBARs or other compliance issues, consider the IRS’ offshore amnesty program (OVDP) or some other method of coming into compliance. Talk to an experienced FBAR lawyer who understands foreign reporting requirements and the best way to come into compliance and avoid harsh penalties. Believe it or not, amnesty is not always the best way. Presently there other options that may avoid all penalties or offer penalties less than the standard 27.5% amnesty penalty.
Whatever you choose to do, act quickly. Raoul Weil spent 5 years looking over his shoulder and was ultimately arrested half a world away and brought back to the United States. It’s much easier – and less costly – to deal with unreported foreign account problems now.
If you have 1 or more years of unfiled FBARs or have an unreported Swiss account, speak with an experienced FBAR lawyer immediately. The stakes are very high and FATCA – the Foreign Account Tax Compliance Act – will soon require every bank worldwide to report American account holders to the IRS. (UBS and several other banks are already cooperating.)
Need more information? Our team of tax lawyers has helped taxpayers across the world with FATCA and FBAR problems. We usually offer flat fees for our services. Because we handle many of these cases, we can offer our services for less cost than many other tax lawyers.
Post by Brian Mahany, Esq.