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On October 29, 2014 we posted More US Taxpayers & Their Advisors Face Jail Time for Failing to Declare Offshore Bank Accounts! where we discussed that the IRS hunt for offshore income and accounts continues unabated well beyond UBS. In fact, it’s intensifying and for those who don’t come forward before they are found, being found can be awfully painful. See list of UBS criminal convictions, so far.

Now according to Bloomberg A former client of Credit Suisse Group AG who pleaded guilty to hiding $200 million from U.S. tax authorities is at the center of a struggle between the Justice Department, which wants to send a stern message by sending tax cheats to prison, and U.S. judges, who have opted for leniency in past cases.

Dan Horsky, a retired business professor from Rochester, New York, pleaded guilty Nov. 4 to using secret Swiss bank accounts to hide assets and income from the Internal Revenue Service and New York tax authorities. Prosecutors urged a judge to send him to prison for 20 months. Horsky’s lawyers said he deserves probation because he helped with a criminal investigation of the bank and will pay at least $124 million in penalties.

U.S. District Judge T.S. Ellis III is set to impose a sentence on Friday in federal court in Alexandria, Virginia. Dozens of wealthy U.S. tax defendants who used offshore accounts have avoided prison or received terms far below those recommended by advisory guidelines, as judges have consistently ruled against Justice Department prosecutors.

We previously posted on November 7, 2016 we posted Swiss Bank Rats Out NYU Business Professor - Results in Fine of $100M & Up To 5 Yrs in Prison - What Are You Waiting For? where we discussed that a former client of Credit Suisse Group AG who pleaded guilty to hiding $200 million from U.S. tax authorities was sentenced to seven months in prison after a judge granted him leniency for cooperating with prosecutors, a Justice Department official said.

Dan Horsky, a retired business professor from Rochester, New York, pleaded guilty on November 4, 2016 to using secret Swiss bank accounts to hide assets and income from the Internal Revenue Service and New York tax authorities. Prosecutors urged a judge to send him to prison for 20 months. Horsky’s lawyers said he deserves probation because he helped with a criminal investigation of the bank and will pay at least $124 million in penalties.

Now according to TaxProToday citing Bloomberg, U.S. District Judge T.S. Ellis III is set to impose a sentence on Friday in federal court in Alexandria, Virginia. Dozens of wealthy U.S. tax defendants who used offshore accounts have avoided prison or received terms far below those recommended by advisory guidelines, as judges have consistently ruled against Justice Department prosecutors.

What sets apart tax cheats who use offshore accounts from other felons is often the large checks they write in back taxes, fines and penalties. In Horsky’s case, he’s paying at least $124 million, and could pay more. Prosecutors don’t want that to be a get-out-of-jail-free card.

Horsky began cooperating in an investigation on three continents in which he provided “voluminous historical, financial, and communications records and his contacts within the financial community,” his lawyers said in a Feb. 4 court filing. The precise nature of his cooperation is described in sealed memos.

Prosecutors are examining how Credit Suisse hid Horsky’s accounts from the Justice Department even as a subsidiary pleaded guilty in May 2014, paying $2.6 billion and admitting it helped thousands of Americans evade taxes, according to people familiar with the matter who weren’t authorized to discuss it publicly. A monitor appointed by New York’s banking regulator continues to review Credit Suisse’s operations after his initial two-year appointment was extended.

Horsky spent almost four decades at the University of Rochester’s Simon Business School, where he became a renowned scholar in quantitative marketing. He researched Internet startup companies, particularly in Israel, where he once lived. He lost money in 17 companies he invested in, running up credit-card debt and taking a second mortgage, according to the memo from his lawyers. In 2000, he invested in a British company through a Swiss account, sticking with the firm even as he ran up $350,000 in debts, often using margin loans.

In 2005, shares in the company began to take off, and by 2008, his holdings were worth $80 million after a second firm bought the company. He then reinvested in the second company, and his assets grew to $200 million by 2014. Even as he hid those assets, “he lived his modest life as a university professor,” according to his attorneys.

The case is U.S. v. Horsky, 16-cr-224, U.S. District Court, Eastern District of Virginia (Alexandria). Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:16-cr-224.

 

 

On February 2, 2017 we posted Border Tariff or Border Adjustment Tax? where we discussed that there's a lot of talk these days about borders and taxes in Washington. U.S. President Donald Trump wants to hit firms that outsource with a simple tariff on imports. Republicans in Congress have pitched a more complex idea, a border adjustment, built into a corporate-tax overhaul.

Now TaxNotes discusses the idea is that U.S. companies that import goods in VAT countries (i.e., almost every other country in the world) are being charged with import VAT. This import VAT is creditable/recoverable for domestic importers, but not for U.S. importers. Therefore, U.S. companies that import goods elsewhere are significantly worse off than domestic traders. This is protectionism and must be retaliated against.

Trump indicated that as president he would respond to these allegedly "unfair trade practices" by imposing retaliatory tariffs on goods and services coming into the U.S. from any country that imposed an import VAT on American businesses exporting goods or services to their country.⁵ More than 160 countries have a VAT, and all of them impose an import VAT. Trump is, essentially, promising a global trade war. He vows to set U.S. tariffs at a rate that would force governments and businesses to take notice.

For example, Trump indicated that he would retaliate against Mexico's 16 percent import VAT with a 35 percent tariff, and respond to China's 17 percent import VAT with a 45 percent tariff. These rates appear to be far more than would be called for to level the playing field. Nevertheless, the president has the authority to set tariffs. In some instances, he needs the consent of Congress. In other cases, he does not. Trump could conceivably set tariffs this high -- or higher.

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On September 12, 2016 we posted US Probe Resulted In EU Apple Tax Assessment where we discussed that the European Commission’s probe into Apple, which resulted in an order for the tech giant to pay up to €13 billion ($14.5 billion) in back taxes to Ireland, was prompted by a U.S. Senate investigation, European Union Competition Commissioner Margrethe Vestager said on Friday.  

Now according to TaxNotesthe European Commission's recent decision in its state aid case against Apple has not only been detrimental to Ireland's tax sovereignty, but it has also been damaging to the effective implementation of the OECD's base erosion and profit-shifting project, according to the tax director of a major Irish accounting body.

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