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FBAR case nets $22M for IRS; possible jail for heiress

Now is clearly not the time to be playing coy with Washington. As we've noted for a while now, the Internal Revenue Service is stepping up its tax evasion enforcement game against Americans in the District of Columbia area and the rest of the country who they suspect of having undeclared caches of cash in foreign banks.

How serious is the agency? Very; as a case that recently has been in the news attests. The case is out of a state in the south, but it's likely that there are more than a few individuals in the D.C. area who will be able to identify with the issues.

At the heart of the case is a 79-year-old widow in Palm Beach, Florida, who apparently inherited a great deal of money when her husband died in 2000. Between the years of 2001 and 2007, she didn't report the fact that she had significant sums in accounts in banks in Switzerland and Liechtenstein on her federal returns. The estimated value of the foreign bank holdings is said to be more than $43 million.

The Justice Department went after the woman and earlier this month, the woman pleaded guilty to charges of filing false tax returns for two of the years in question. Under the terms of her plea, she will be required to pay the IRS half the value of the foreign bank account holdings -- nearly $22 million.

Additionally, she could face prison time when she is sentenced. That's due to happen at the end of March. While the maximum term she could get is six years, reports indicate it might end up being only half that. There are likely those who will say that any term at all will be a lot for her to endure.

Anyone with foreign accounts holding more than $10,000 need to know that they are obligated to report their holdings through a Foreign Bank and Financial Account Report (FBAR). Given the outcome of the case above, anyone wondering if they face potential liability in this regard should speak with an attorney, rather than guess.

Source: USA Today, "Mega-millionaire, 79, admits offshore tax evasion," Kevin McCoy, Jan. 8, 2013

  • The issues addressed here are those handled by our firm. Readers can learn more about our practice at our Washington, D.C., IRS audits page.

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