In November 2016 New York emeritus professor Dan Horsky, pled guilty to conspiring with others to defraud the United States and to submitting a false expatriation statement to the Internal Revenue Service (IRS). Mr Horsky used a series of offshore companies and Swiss accounts to conceal his very successful investments in start up companies. Upon retirement teaching business administration Mr Horsky decided to retire renounce his citizenship. While he had previously failed to disclose the accounts on his FBAR forms and substantial investment in foreign companies and partnerships. Mr Horsky compounded his problem by filing an expatriation statement where he substantially understated the value of his assets.
The IRS has not disclosed how it discover Mr Horsky’s fraud but in their press release they said.
“The Department and its partners within the IRS are receiving a tremendous amount of information from a wide variety of sources, and we are using that information to pursue and prosecute individuals like Mr. Horsky, who violate our nation’s tax laws”.
It’s also important to note that the IRS paid out a record amount of money in whistle blower rewards. The incentive to report someone with undisclosed assets is very real.
Mr Horsky is to be sentenced on February 10th to what is supposed to be substantial prison time.
While it may be easy to see the IRS prosecuting Mr Horsky many U.S. citizens living abroad do not know that they are now in the cross hairs of the IRS international accounts investigations. This is because failure to file Foreign Bank Account Reports (FBAR) on offshore accounts with aggregated high balances over ten thousand U.S.D. during the year may result in fines of up to 50 percent of that high balance and possible prison time, because failure to file the correct forms is a criminal matter not a civil one in the case of foreign accounts. Because the fines are so large the IRS has looked at them as massive revenue stream. The problem for U.S. Citizens living overseas is that many are not filling out the correct forms and still others are not aware they are even required by law to file a U.S. Tax return and FBAR forms, regardless of the length of time they have lived overseas.
The good news for those with undisclosed accounts is that the IRS currently has a series of programs that allow for individuals to come into compliance with minimal penalties as long as they are deemed to not have been willful in hiding assets.
If at any point you believe that you have undisclosed assets, contact us at James@aitaxadvisers.com. We will help you come into compliance with the IRS.
American International Tax Advisers is a IRS Authorized Efiler.