Article Targeted to Jewish Readers As A Result of Israeli Bank Developments (3/16/13)

Readers already know that, now that the Government is doing, in some respects, a mop-up operation for Swiss Banks (plenty to come, but the sights are set), the Government is focusing on banks in other countries -- now particularly Israel.  See the links to Bank Leumi and Mizrahi-Tefahot Bank in the links below.  A reporter for the New Jersey Standard recently interviewed Larry Horn, here, a prominent lawyer heavily involved in the offshore account practice, regarding this initiative.  Larry Yudelson, Time to Come Clean (New Jersey Jewish Standard 3/15/13), here.  Key excerpts are:

Another indication that Bank Leumi is under investigation by U.S. authorities — and may be disclosing account holders to American tax authorities — came last week, when the bank said it set aside $90 million to cover costs for the investigation. In February, an Israeli-born Los Angeles businessman struck a plea deal concerning $4 million hidden in overseas banks — reported to be Bank Leumi and Mizrahi Tefahot Bank. 

“Once the bank gives your name to the IRS, you’re disqualified” from entering the disclosure program, Horn said. “If you’re under an audit, under examination, or the bank has disclosed your name, you can’t enter the program.” 

Another indication that Bank Leumi is under investigation by U.S. authorities — and may be disclosing account holders to American tax authorities — came last week, when the bank said it set aside $90 million to cover costs for the investigation. In February, an Israeli-born Los Angeles businessman struck a plea deal concerning $4 million hidden in overseas banks — reported to be Bank Leumi and Mizrahi Tefahot Bank.
“Once the bank gives your name to the IRS, you’re disqualified” from entering the disclosure program, Horn said. “If you’re under an audit, under examination, or the bank has disclosed your name, you can’t enter the program.” 

* * * *  

He warns that prison terms are a possibility for people who get caught up in the IRS’ dragnet — particularly if they’ve been hiding accounts worth a million dollars or more.
At that level, unreported taxes on interest earned by the accounts can equal tens or hundreds of thousands of dollars — and that rises to the level of criminal tax evasion and possibly three years in prison.

“If you plead guilty you can get it down to two years,” Horn said. 

* * * * 

Even with the voluntary disclosure, be prepared to forfeit more than a quarter of the value of the account at its peak. But that’s still a better deal than the 50 percent the IRS will take from your account if it’s the government that starts the conversation.\ 

Horn’s advice: Contact an attorney about coming clean through the disclosure program.

JAT Comments:

1.  As to prison terms, the number of convictions of taxpayers (as opposed to enablers) now exceed 60 in the most recent initiative (since 2009).  The sentencing judges in those now sentenced over 40, the sentences in the case of guilty pleas (virtually all) have been relatively light for the level of tax loss and sophistication.  Those interested in pursuing the subject should review the spreadsheet downloadable from the right column.

2.  The author, apparently not quoting Larry, says that the $1 million + level of deposit with related income of tens or hundreds of dollars rises to the level of tax evasion and possible three years.  Tax evasion is a 5 year crime.  I think Larry probably said tax perjury which is a three year crime and is what DOJ Tax usually offers as a plea deal.  (Tax evasion may be involved, but DOJ Tax has typically permitted the taxpayer to plea to tax perjury; I should caution that one or two recent pleas have been for tax evasion.)