UBS Customers continue to be prosecuted

Falsifying returns and FBAR failure are now an easy case for the IRS thanks to UBS records

Jeffrey S. Freeman, J.D., LL.M

Clients that utilized Swiss banks to hide their assets are just beginning to see prosecution come raining down. As the government gains access to more and more foreign records thanks to court proceedings and voluntary disclosure programs with foreign banks these proceedings will likely become more and more common. Using technology the IRS is easily able to determine if foreign funds were declared on returns and gross differences are easy to spot.

FBAR Failure in Atlanta, GA

Failing to file FBARs (Report of Foreign Bank and Financial Accounts) is an offense that carries a civil and financial crime penalty. Each willful violation carries a penalty of the greater of $100,000 or 50% of the account balance for each year you failed to file an FBAR. When considered a criminal offense failing to file FBARs carries fines up to $500,000 and up to ten years in prison.

Recently in Atlanta, Georgia Mr. Howard Bloomberg, pleaded guilty to failing to file a FBAR for the year 2008. Mr. Bloomberg held an account at UBS from July 1997 through April 2008. The highest account value was $930,000 in 2001 and was $540,000 at its closing. Funds were routinely wired from the UBS account to his U.S. accounts. For failing to file the 2008 FBAR, Mr. Bloomberg agreed to pay a penalty of $278, 397, just slightly more than half the final account balance. In addition, he is required to file accurate FBARs from 1997 to 2008. In his December sentencing, Mr. Bloomberg will a possible five years imprisonment and three years supervised release.

New Hampshire return falsification

In Concord, New Hampshire Mr. Menashe Cohen, an oriental carpet dealer, plead guilty to filing a false federal income tax return for 2009. Mr. Cohen declared a foreign account held in Jersey (located off the coast of Normandy, France), but failed to include bank accounts maintained in Israel and at UBS in Switzerland. He reported $350 in interest income, which grossly misrepresented the $66,500 in interest income he received in 2009.

In total Mr. Cohen failed to report $170,000 in earned income from offshore accounts from 2006 through 2009. Additionally, he filed a false FBAR for 2009 mentioning his accounts in Jersey and Israel, but not including his UBS account. In January 2015, Cohen faces a maximum sentence of three years in prison and a maximum fine of $250,000. He has agreed to clear up his civil liability for failing to report his UBS account in a FBAR by paying a 50% penalty of the high balance of his interest in the UBS account.

About Freeman Tax Law

Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.

Freeman Tax Law

(855) 935-5945

[email protected]