The Internal Revenue Service has been working hard to collect the taxes that are owed to it. It takes tax evasion extremely seriously, and even seemingly minor violations can result in substantial fines and jail time. For anyone with foreign banking and financial accounts, it is important to report them on your tax return. Failure to do so can lead to accusations of tax evasion, as a Massachusetts bank director found out recently.
The 53-year-old director had sent money to a business partner’s account in Switzerland, and later wired it to an account in Bermuda. The man’s Bermuda account was reportedly active for five years, earning him around $100,000. The IRS claims that he did not pay taxes on this gain and owes them $41,000. The director is in the process of getting a plea agreement approved. Should the agreement go through, the man will be required to pay an addition $76,000 in penalties.
While the financial penalties may seem severe, the man also faces other consequences. He could potentially be sentenced to five years in jail and be required to pay an additional $250,000. If sentenced to jail, he could also be placed under supervision for up to three years after being released. As is evident in this case, the IRS is very serious about making sure that people do not cheat on their taxes.
For Massachusetts residents with a foreign bank account who forgot to declare it on last year’s tax return, experienced tax attorneys may be able to help file an amended return to correct this mistake. Forgetting to do so could result in misinterpretation by the IRS as intentional tax evasion, possibly leading to penalties and jail time.
Source: TaxLawHome.com, “Massachusetts bank director charged with tax evasion,” Kristen MacBeth, 20 May 2011