Monthly Archives: September 2021

According to the DoJ, an indictment was unsealed in New York, that charges  offshore financial service executives and a Swiss financial services company with conspiracy to defraud the IRS by helping three large-value U.S. taxpayer-clients conceal more than $60 million in income and assets held in undeclared, offshore bank accounts and to evade U.S. income taxes.

According to the indictment, from 2009 to 2014, Ivo Bechtiger, Bernhard Lampert, Peter Rüegg, Roderic Sage, Rolf Schnellmann, Daniel Wälchli and Zurich, Switzerland-based Allied Finance Trust AG allegedly defrauded the IRS by concealing income and assets of certain U.S. taxpayer clients with undeclared bank accounts located at Privatbank IHAG (IHAG), a Swiss private bank in Zurich, Switzerland, and elsewhere.

In order to assist those clients, the defendants and others allegedly devised and used a scheme called the “Singapore Solution” to conceal the bank accounts of the U.S.-based clients, their assets, and their income from U.S. authorities. In furtherance of the scheme, the defendants and others allegedly conspired to transfer more than $60 million from undeclared IHAG bank accounts of the three U.S. clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG, ostensibly held in the name of a Singapore-based asset manager. The U.S. clients allegedly paid large fees to IHAG and others to help them conceal their funds and assets. 

“Prosecuting offshore tax evasion remains one of the Tax Division’s highest priorities,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. 

“Taxpayers Contemplating Hiding Money Abroad And The Foreign Bankers, Attorneys And Finance Professionals Who Design And Execute Strategies To Assist Their Evasion; 

Should Know That The Tax Division And IRS Have The
Investigative Resources And Expertise To
Unravel Even The Most Elaborate Schemes.”

“As alleged, the individual defendants and the Swiss firm Allied Finance conspired to defraud the IRS by assisting U.S. taxpayers in avoiding their tax obligations,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “They allegedly did this through an elaborate scheme that involved concealing customer assets at a Swiss private bank through nominee bank accounts in Hong Kong and elsewhere, with funds returning to the private bank in the name of a Singapore firm. One such U.S. customer, Wayne Chinn, pleaded guilty to his participation in the so-called ‘Singapore Solution,’ forfeited more than $2 million to the United States, and awaits sentencing for his admitted crime.”

If convicted, the defendants face a maximum penalty of five (5) years in prison, supervised release, and monetary penalties, and the corporate defendant faces monetary penalties. An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Also unsealed was the guilty plea of Wayne Franklyn Chinn, of Vietnam and San Francisco, California, one of the U.S. taxpayer-clients, who participated in the Singapore Solution scheme. 

Chinn pleaded guilty to one count of tax evasion which carries a maximum penalty of five (5) years in prison. Chinn also consented to the civil forfeiture of 83% of the funds held in five accounts at two Singapore banks, which resulted in the successful forfeiture and repatriation to the United States of approximately $2.2 million. The civil forfeiture proceeding is United States of America v. Certain Funds on Deposit in Various Accounts, 20 Civ. 3397 (LJL). 

Chinn is scheduled to be sentenced on Nov. 19, and faces a maximum penalty of five (5) years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

 Do You Have Undeclared Offshore Income?

Read more at: Tax Times blog

The Internal Revenue Service announced that starting Oct. 28, 2021 a new $67 user fee will apply to any estate that requests a closing letter for its federal estate tax return.

The new user fee was authorized under final regulations, TD 9957, available today in the Federal Register. Closing letter requests must be made using Pay.gov. The IRS will provide further procedural details before the user fee goes into effect.

By law, federal agencies are required to charge a user fee to cover the cost of providing certain services to the public that confer a special benefit to the recipient. Moreover, agencies must review these fees every two years to determine whether they are recovering the cost of these services.

Under The Final Regulations, The IRS Has Determined That Issuing Closing Letters Is A Service That
Confers A Special Benefit Warranting A User Fee.

That’s because, though obtaining a closing letter from the IRS can be helpful to an executor of an estate, it is not required by law. Moreover, the estate has the option of obtaining from the IRS, free of charge, an account transcript, showing certain information from the estate tax return, comparable to that found in a closing letter. 

As noted in the final regulations, account transcripts can be used to confirm that an estate tax return examination has been completed and the IRS file has been closed, which is the reason most often cited for requesting a closing letter.

 

Read more at: Tax Times blog

TIGTA initiated this audit to evaluate IRS processes to identify and prevent potentially fraudulent individual international tax returns. Nonresident aliens (hereafter referred to as nonresidents) are generally required to file a tax return to report their U.S. source income and pay any tax due. In contrast, residents of a U.S. territory generally report their U.S. source income on their territory tax return (i.e., do not have a U.S. tax return filing requirement), unless these individuals have self-employment income of $400 or more, or are eligible to claim certain tax credits.

 Have an IRS Tax Problem?

     Contact the Tax Lawyers at

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

On July 30, 2021 we posted Court Orders Fedex, CitiBank & Others to Give the IRS Panama Offshore Account Info! where we discussed that in the case of In the Matter of Tax Liabilities of John Does, case number 1:21-mc-00424-GHW, a federal judge said that he will allow the IRS to obtain from couriers and financial institutions, including FedEx and Bank of America, records of individuals who may have used Panamanian offshore service providers to hide assets, the U.S. Justice Department said on July 29, 2021.

U.S. District Judge Gregory H. Wood, of the Southern District of New York, approved Internal Revenue Service summonses to seek the information from financial institutions including Citibank, Wells Fargo Bank and couriers including FedEx Corp. and UPS Inc. 

The Summonses Request Information on Deliveries and Electronic Fund Transfers Between 

Panama Offshore Legal Services and Clients Who 
May Have Used Its Services To Create or Control

Foreign Assets To Avoid Tax Obligations, The DOJ Said.

The IRS is investigating taxpayers who may have used Panama Offshore Legal Services, which is part of a collective of related entities known as the POLS Group, to facilitate concealing income and assets from U.S. tax authorities between 2013 and 2020. The government has been seeking information from other entities, including MoneyGram Payment Systems, through a separate summonses request in Minnesota to investigate those who may have violated U.S. laws by hiding taxable income and assets.

POLS is a Panamanian law firm that advertises services including the creation of foundations and corporations as well as offshore financial accounts while promising clients "100% anonymity, privacy and confidentiality," according to the DOJ."

A U.S. person that has a financial interest in, or signature authority over, a foreign financial account must file a FinCEN Form 114 (Report of Foreign Bank and Financial Accounts, commonly referred to as an FBAR) when the aggregate value of their foreign financial accounts exceeds $10,000 at any time during the calendar year. (Instructions to FinCEN Form 114)

In addition, U.S. individuals who have a financial interest in, or signature authority over, a financial account in a foreign country or who have received a distribution from, were a grantor of, or a transferor to, a foreign trust, must report that interest on Part III, Schedule B, Form 1040. (Instructions to Schedule B (Form 1040))

To encourage U.S. taxpayers to report their offshore accounts and assets, the IRS offered several versions of an Offshore Voluntary Disclosure Program (OVDP). The OVDP allowed U.S. taxpayers to voluntarily disclose foreign accounts or entities used to evade U.S. taxes in exchange for reduced penalties. The last OVDP closed on September 28, 2018. 

The Minnesota court in this case found that the IRS satisfied the three statutory prerequisites for issuing a John Doe summons:

1. First, the IRS's investigation concerns an ascertainable group of people. (Code Sec. 7609(f)(1))
2. Second, the IRS provided information showing that there is a reasonable basis for believing that U.S. individuals using POLS's services may fail or have failed to comply with any provision of any internal revenue law. (Code Sec. 7609(f)(2))
3. Third, the information the IRS sought on those using POLS's services, including their identities, is not readily available from other sources. (Code Sec. 7609(f)(3))

The court also found that the information the IRS sought to summon was narrowly tailored to information pertaining to the failure or potential failure of the group to comply with internal revenue laws. (Code Sec. 7609(f)) 

Finally, the court noted that the IRS provided evidence that POLS accepts payments for its services via wire transfer from MoneyGram and that POLS customers are directed to make payments through MoneyGram. 

Do You Have Undeclared Offshore Income?

 

Want to Know Which
Voluntary Disclosure Program
is Right for You? 

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888) 882-9243

 

Read more at: Tax Times blog