Offshore bank accounts–getting riskier

by Linda Beale

Offshore bank accounts–getting riskier
crossposted with Ataxingmatter

As I noted in an earlier posting, the IRS has continued its focus on secret offshore bank accounts. Naturally, the media covers this issue for their wealthy readers who are following the IRS’s every action in this matter. See, e.g., Paul Sullivan, Hiding Money Overseas? You’re Taking a Big Chance, NYTimes, Feb. 4, 2010.

Sullivan runs through the ways that it has become riskier to hide accounts, as Wikileaks now has indicated that it plans a release of additional names provided by a whistleblower. It’s not just whistleblowers that secret account holders need to worry about, of course. Jilted lovers, business competitors, disgruntled employees–anyone who knows about the account could turn into a whistleblower for personal reasons, with the whistleblower reward just icing on the cake.

Sullivan reminds us that keeping money offshore isn’t illegal in itself; rather, it is the failure to report and pay taxes on the income according to US tax laws that is the illegal activity. Some of those caught by the law are unintentional scofflaws. Sullivan runs through the various reasons that someone may end up facing a penalty for an offshore account even though they had no intention of using the account to evade tax laws, such as beneficiaries of Holocaust survivors who had moved assets into Swiss banks to escape Nazi confiscation.

For the evaders, Sullivan talks about their “risk” of getting caught and their risk of paying significant penalties. But what seems to be missing from Sullivan’s account is any real sense of disgust for those who do intentionally decide to evade their income tax responsibilities. That’s quite likely criminal fraud.