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HSBC India Client Indicted for Filing False Tax Returns and Failing to Report Foreign Bank Account

by Gary Slavett | Jul 8, 2011 | FBAR, Internal Revenue Service, Offshore Income

wire transfer

July 8, 2011 – The Department of Justice and the Internal Revenue Service (IRS) announced on June 28, 2011, that Dr. Arvind Ahuja of Wisconsin was indicted on four counts of willfully filing materially false tax returns and four counts of failing to file Reports of Foreign Bank and Financial Accounts (FBARs).

According to the indictment, Dr. Ahuja, a board-certified neurosurgeon, wire transferred and maintained millions of dollars in bank accounts in India and the Bailiwick of Jersey at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC).  In 2009, the HSBC bank account in India had a balance of $8,733,785.   The indictment alleges that Dr. Ahuja failed to report these bank accounts to the IRS on his 2006-2009 tax returns. The indictment further alleges that Dr. Ahuja failed to report more than $1.2 million in interest income that he earned from his HSBC India account and failed to pay the taxes due on that income.  For the 2006-2009 tax years, Dr. Ahuja also failed to file FBARs to report his foreign bank accounts to the Department of the Treasury.

As alleged in the indictment, U.S. citizens have an obligation to report to the IRS on Schedule B of their U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign county in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained.  They further have an obligation to report all income earned from foreign financial accounts on the tax return and to pay the taxes due on that income.  Separately, U.S. citizens with a financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must also file an FBAR form with the Department of the Treasury disclosing such an account by June 30 of the following year.

Each false tax return charge carries a maximum penalty of three years in prison and a $250,000 fine. The failure to file FBAR charges each carry a maximum penalty of 10 years in prison and a $500,000 fine.

The IRS currently is offering taxpayers with undisclosed income from offshore accounts the opportunity to participate in a new, voluntary disclosure initiative in order to get current on their tax returns and reporting requirements.  The 2011 Offshore Voluntary Disclosure Initiative (OVDI) will be available only through August 21, 2011.

If you have any questions regarding an offshore account and/or the IRS 2011 OVDI, please contact a former IRS tax attorney at Holtz, Slavett & Drabkin at (310) 550-6200.

Holtz, Slavett & Drabkin
Former IRS Tax Attorneys
(310) 550-6200
315 S. Beverly Drive
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Beverly Hills, CA 90212

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Internal Revenue Service > FBAR > HSBC India Client Indicted for Filing False Tax Returns and Failing to Report Foreign Bank Account

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