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Perp Walks Begin: UBS Client Pleads Guilty

litigation_blindForbes digital news service reports that a  New Jersey client of the international banking giant UBS has pleaded guilty to concealing more than $6 million in assets in Swiss bank accounts.   Juergen Homann of Saddle River is the fifth US client of UBS to plead guilty in an ongoing federal investigation into the bank’s practices.  UBS officials have admitted helping wealthy American clients use foreign accounts to hide assets from the IRS.

Homann, 66, is a German-born U.S. citizen runs an industrial mineral and chemical trading company that does business mainly between China and Latin America.  Prosecutors say Homman established an account with UBS in the late 1980’s in the name of a Liechtenstein foundation. Under the advice of Swiss lawyer Matthias Rickenbach, prosecutors say Homann transferred his assets to a Hong Kong corporation to hide assets from the IRS.  Rickenbach was indicted for fraud in August for his alleged role in helping wealthy clients conceal their assets.

Under terms of the plea agreement, Homann pleaded guilty to one count information for purposely failing to report his foreign accounts. He acknowledged in a Newark federal courtroom Friday that in addition to not filing the required disclosure forms, he failed to report the account on his individual tax return and failed to report income earned on the account.  Homann faces a maximum sentence of five years in prison and a fine that could potentially reach several million dollars.

UBS has entered into an agreement with the authorities to divulge names of some 4,450 wealthy Americans suspected of evading taxes through secret bank accounts.

Michael Ben’Ary, a trial attorney with the U.S. Department of Justice’s tax division, said Homann’s guilty plea is part of a wider multi-agency investigation that is continuing in New Jersey and nationally.

UBS clients Steven Michael Rubinstein of Boca Raton, Fla., Robert Moran of Ft. Lauderdale, Fla. and Jeffrey Chernick of Stanfordville, N.Y. have all pleaded guilty to filing a false tax return as part of the case. UBS client John McCarthy of Malibu, Calif., has pleaded guilty for failing to report his ownership of and interest in a foreign financial account.

“The IRS is serious about pursuing people with hidden offshore accounts, and we are stepping up our international efforts,” IRS Commissioner Doug Shulman said in a statement. “People should make sure they meet their filing requirements. Failure to do so can carry serious consequences.”

Sum2 publishes the Corporate Audit Risk Program (CARP).  The CARP helps corporate entities that utilize offshore structures and investment partnerships assess their risk exposures to IRS Industry Focus Issues.  The CARP is a vital tool to uncover and mitigate costly exposures to IRS tax audit risk.

Order your CARP here.

Risk: tax, compliance, penalties, reputation, litigation

September 26, 2009 Posted by | AML, banking, hedge funds, IARP, IRS, off shore, private equity, regulatory, Sum2, Tax, Treasury | , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments

UBS to Clients, “You’re on the List!”

 

tax evasionSwiss banking giant UBS, announced that it will inform American clients whether information about their bank accounts will be turned over to the US Justice Department in a tax evasion investigation.  UBS is required to disclose information on over 4,300 American citizens who are clients of the firms private banking division.  The US Justice Department believes that wealthy Americans are using these accounts to conceal assets and are using the bank to hide money under the protection of Switzerland’s storied bank secrecy laws.

UBS has so far refused to name the individuals in public. U.S. authorities, meanwhile, have hoped that the identities of the individuals on the list would be kept secret for longer so that more Americans with undeclared assets abroad might come forward under a recently extended tax amnesty program.

According to a bank  spokesperson,  “UBS is currently examining which client relationships fulfill the government’s criteria of ‘tax fraud.”  The review may take some months but UBS is committed to informing clients that they are affected by the tax evasion investigation.  UBS has already informed 500 clients that they are the subject of an investigation by the US Justice Department.

The IRS on Monday said it would extend its deadline for an amnesty program that has been flooded with applications from people who hid assets overseas. The program promises no jail time and reduced penalties for tax dodgers who come forward.

The financial services industry can expect these types of investigations to become more commonplace.  Institutions that offer hedge funds and investment products that cater to High Net Worth investors will increasingly become  subject to greater scrutiny as the US Treasury Department and its enforcement arm the IRS moves to insure that compliance with tax laws and statutes are adhered too.

This resolution signifies that the IRS is serious about its intention to ramp up enforcement of the tax code.  The IRS has enhanced its focus on US citizens and corporations utilizing foreign banks and offshore investment vehicles.  The agency is concerned that investment products and financial services offered by foreign banks have enabled US citizens and corporations to avoid tax liabilities.  Products such as credit cards, hedge funds and other investment partnerships are coming under the exacting microscope of the IRS.

The IRS is under pressure to enforce compliance with federal tax statutes.  The US Treasury coffers are seriously depleted  and the IRS is is looking to assure all taxable revenue streams are identified and taxpayers pay taxes on all capital gains and income.  The IRS has developed an Industry Focus Issue, (IFI) audit strategy.  IFI’s provides IRS field auditors tax risk profiles of investment partnerships and other corporate entities that use offshore domiciles to harbor assets.  IFI guides field audit personnel through a risk based assessment of investment partnerships.  The IFI aggregates and ranks  Three Tiers of high risk tax compliance issues.  Examiners will conduct rigorous reviews of these issue sensitive factors.  Many of the factors concern the recognition of income and assets in custody outside of the US and repatriation of revenue derived in foreign domiciles.

Sum2 has published a product, IRS Audit Risk Program (IARP) that guides corporate tax managers and tax professionals through a risk assessment of their exposure to IFI risk factors.  The IARP is a strategic tool that corporate tax professionals utilize to score risk exposures, determine mitigation actions, estimate remediation expenses and manage tax controversy defense strategies.  The IARP is available for purchase on Amazon.com.

You Tube Video: O’Jays, For the Love of Money

Risk: tax evasion, compliance, reputation, prison

September 22, 2009 Posted by | Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , , , | 4 Comments