Monthly Archives: December 2018

According to Law360, New York federal prosecutors announced the indictment of a lawyer and three other men on December 4, 2018 on charges of wire fraud, tax evasion and money laundering, tying the case to the 2016 leak of documents from the law firm Mossack Fonseca called the Panama Papers.

Law enforcement officials described the charges against attorney Ramses Owens, who remains at large, and investment manager Dirk Brauer, accountant Richard Gaffey and businessman Harald Joachim von der Goltz, all of whom have been arrested, as a warning to would-be tax criminals and those who would help them. The defendants could face decades in prison.

“Law firms, asset managers and accountants play key roles enabling entry into the global financial system,” Assistant Attorney General Brian Benczkowski said in a statement.  

According to the government, Owens and Brauer, who worked for a firm called Mossfon Asset Management SA with close ties to Owens’ law firm, have spent decades helping U.S. citizens avoid their tax obligations. One such client was von der Goltz, although four other unnamed clients are referred to in the indictment. Gaffey allegedly helped von der Goltz and at least one other client of of Mossack Fonseca.

With help from Mossack Fonseca, the government claims, clients like von der Goltz used shell companies in offshore jurisdictions with strict financial secrecy laws that were technically owned by sham foundations to hide untold amounts of money from the IRS. Von der Goltz falsely told prosecutors that his 102-year-old mother, who lives in Guatemala, was the beneficial owner of companies linked to him, the government claims.

The defendants, who range in age from 50 to 81, face a total of 11 counts. Two of the counts are against von der Goltz alone for allegedly providing false statements to the government after an unnamed representative of a U.S. law firm reached out to the U.S. Department of Justice after the Panama Papers disclosure and offered to set the record straight, according to the indictment.

Authorities said the investigation was a joint effort of investigators at the IRS, the FBI and the U.S. Department of Homeland Security.
 

said Don Fort, who leads the tax agency’s criminal investigations unit. “Cases like this help maintain the public’s confidence in our tax system by letting them know that we investigate and prosecute those who evade their tax obligation.” The case is U.S. v. Owens et al., case number 1:18-cr-00693, in the U.S. District Court for the Southern District of New York.

 



IRS deputy commissioner for services and enforcement Kirsten Wielobob issued a memorandum on November 20, 2018 that the IRS posted publicly Thursday, November 28, 2018, which outlines the process for all voluntary disclosures following the closing of the IRS’s Offshore Voluntary Disclosure Program on Sept. 28, 2018. She noted in the memo that the 2014 OVDP began as a modified version of the OVDP that launched in 2012 after earlier programs in 2009 and 2011. 

Voluntary disclosure is a long-standing practice of the IRS to provide taxpayers with criminal exposure a means to come into compliance with the law and potentially avoid criminal prosecution. See I.R.M. 9.5.11.9. This memorandum updates that voluntary disclosure practice. Taxpayers who did not commit any tax or tax related crimes and do not need the voluntary disclosure practice to seek protection from potential criminal prosecution can continue to correct past mistakes using the procedures the updated Voluntary Disclosure Program or by filing an amended or past due tax return. When these returns are examined, examiners will follow existing law and guidance governing audits of the issues.
“These programs were designed for taxpayers with exposure to potential criminal liability or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets,” Kirsten Wielobob wrote.

The new procedures are effective for all disclosures after Sept. 28, 2018. The penalties have continue to increase, since the original OVDI program began in 2009.
 

The process begins with taxpayers requesting “pre-clearance” for participation from the agency’s Criminal Investigation Division, after which civil examiners determine tax liabilities and penalties. The civil penalties, which may be assessed for fraud or the fraudulent failure to file income tax returns, could be higher than what would have been assessed under the old Offshore Voluntary Disclosure Program that the IRS ended Sept. 28.

For all cases where CI grants preclearance, taxpayers must then promptly submit to CI all required voluntary disclosure documents using a forthcoming revision of Form 14457. This form will require information related to taxpayer noncompliance, including a narrative providing the facts and circumstances, assets, entities, related parties and any professional advisors involved in the noncompliance.

Once CI has received and preliminarily accepted the taxpayer’s voluntary disclosure, CI will notify the taxpayer of preliminary acceptance by letter and simultaneously forward the voluntary disclosure letter and attachments to the LB&I Austin unit for case preparation before examination. CI will not process tax returns or payments.  

The updated Voluntary Disclosure Procedures also provide for various outcomes depending upon the extent of taxpayers’ cooperation with the IRS.