Tax Preparers Indicted for Tax Fraud Using Israeli Bank Accounts
Since 2009, the IRS has been aggressively investigating many foreign financial institutions, with the intent to dig deep into offshore tax evasion. The IRS believed that many US taxpayers have been hiding assets from US authorities in foreign banks. Under the pressure of criminal charges from the Department of Justice, UBS AG, one of the largest Swiss banks, chose to turn over names of more than 4000 customers, and pay a $780 million fine. The IRS also rolled out a number of Offshore Voluntary Disclosure programs, offering taxpayers to voluntarily come to the IRS, pay taxes and penalties for the past 8 years, and in exchange, avoid criminal prosecution. Although Swiss banks had been determined to be the central problem, the IRS has been thoroughly analyzing the information provided in the disclosure program in order to find other areas of non-compliance. An indictment brought by the US government this week seems to indicate that the IRS will now pay attention to Israeli banks.
Three men have been indicted for setting up offshore corporations that held secret accounts at Israeli banks. The defendants: David Kalai, Nadav Kalai, and David Almog worked for United Revenue Service Inc., a tax preparation firm with 12 US offices. According to the indictment, they underreported clients’ income, failed to report foreign accounts, and prepared corporate and partnership tax returns that falsely reported money sent offshore as investment losses or business expenses. For one client the defendants transferred $1.9 million to one of the Israeli banks.
The two Israeli banks are located in Tel Aviv, but their names have not been disclosed. According to the information, “Bank A” has more than 336 branches in 18 countries, and “Bank B” has a worldwide presence on four continents.
With the June 30 deadline for taxpayers to file Foreign Bank Account Reports (FBAR) approaching, the indictment is a timely reminder for taxpayers with foreign assets to seek an advice from experienced tax attorneys.
Former IRS Tax Attorneys of Holtz, Slavett & Drabkin are available to assist you with the issues related to offshore assets and foreign accounts. To arrange for a consultations, please contact us at (310) 550-6200.
Copyright (c) 2012 Igor S. Drabkin. All Rights Reserved.