Teymour Khoubian, a businessman based in Southern California, was recently sentenced to 21 months in prison for filing false tax returns that failed to report his offshore accounts in Germany and Israel from 2005 through 2011, representing a total tax loss to the U.S. of about $1.2 million. In addition to the prison sentence, Khoubian was ordered to pay over $600,000 in restitution to the Internal Revenue Service (IRS) and penalties of over $7 million.
The Internal Revenue Service (IRS) recently announced the "Relief Procedures for Certain Former Citizens," which will allow certain individuals to come into compliance with their U.S. tax and filing obligations. The procedures apply to individuals who are former U.S. citizens or who intend to relinquish citizenship, have not filed U.S. tax returns as citizens or residents, owe a limited amount of back taxes, and have net assets under $2 million. There is also a willfulness component to consider.
The U.S. Department of Justice recently entered into an agreement with yet another foreign bank, LLB Verwaltung (Switzerland) AG, for the bank's role in assisting clients evade their U.S. tax obligations. LLB-Switzerland's business with U.S. clients boomed in 2008, after it became public that UBS AG, Switzerland's largest bank, was under criminal investigation in the U.S. for a number of violations, including tax crimes. LLB-Switzerland at one point held over $176 million in U.S. client funds, which the bank's management knew were largely undeclared. As a result of the recent agreement, LLB-Switzerland will pay the U.S. a penalty of $10.6 million.
The Internal Revenue Service (IRS) Large Business and International division (LB&I) recently announced three new compliance campaigns focused on offshore private banking, captive services providers, and information returns filed by individuals concerning foreign corporations (Forms 5471), with plans to first use audits and letters to address these compliance issues. According to its press release, the IRS has records that identify taxpayers with transactions or accounts at foreign private banks, which it will use to address compliance issues within that campaign.
Eli Waknine of Huntington Beach, California, pleaded guilty this week to filing a false tax return that failed to report over $2 million held at an Israeli bank between 1994 and 2011. He further attempted to conceal his offshore assets by instructing the bank to forego mailing documents to the U.S. and using "back-to-back" loans to access his offshore funds.
A Californian pleaded guilty this week before the U.S. District Court, Central District of California, to willfully failing to disclose over $1 million held in offshore bank accounts. He and the bank also took other steps to hide and secretly access his funds. The man now faces up to five years in prison, supervised release, restitution, and other monetary penalties.
The Department of Justice recently imposed another $5.3 million penalty on Bank Lombard Odier & Co., Ltd., a Swiss bank that has already paid over $99 million for offering offshore banking services to U.S. taxpayers without disclosing their transactions. Since Bank Lombard signed its first non-prosecution agreement in 2015, it has acquired 88 additional accounts, again without disclosing them as required.
NPB Neue Privat Bank, a Swiss private bank based in Zurich, and the U.S. Department of Justice Tax Division signed a non-prosecution agreement on July 18, 2018, by which NPB will pay a $5 million penalty for aiding U.S. taxpayers in opening accounts to conceal assets and income from the U.S. government. Between August 2008 and December 2015, NPB managed approximately $400 million annually in both declared and undeclared assets. The bank failed to disclose the identities of American clients to the Internal Revenue Service after entering into a Qualified Intermediary Agreement in 2001 whereby it was to report U.S. securities transactions to the IRS on Forms 1099 and obtain Forms W-9 from new and existing U.S. clients to help verify their tax compliance.
What do a U.S. Senator, the owner of an Albanian brokerage firm, an attorney who is a dual citizen of America and Israel, and a group of current and former U.S. citizen now living in Canada, Switzerland, and the Czech Republic all have in common? They have been denied review by the U.S. Supreme Court in their jointly failed attempt to enjoin the enforcement of the Foreign Account Tax Compliance Act (FATCA), certain intergovernmental agreements (IGAs), and the foreign bank account reporting (FBAR) penalty.
A resident of Saratoga, California, was recently convicted of filing false tax returns and making false statements to an Internal Revenue Service (IRS) agent during an audit. The taxpayer, who owns part of a home-based international trading business, failed to report profits related to sales to China during 2006 and 2007, and he made false statements concerning ownership of foreign bank accounts.