Massachusetts residents who possess offshore accounts would do well to follow an ongoing case in which a U.S. District Court judge most recently instructed five unidentified individuals to reveal confidential information about their finances. The judge ordered these taxpayers to divulge information about their foreign bank accounts to a grand jury to potentially use in a federal case against them.
While some may argue that the judge had no authority to deprive individuals of their right to avoid self-incrimination, the judge said that individuals do not have the right to refuse disclosure of their bank records to the grand jury. The judge also argued that taxpayers cannot avoid being accountable because they used offshore accounts to try to hide assets. District courts in three other jurisdictions have also ruled that information related to a foreign bank account is not protected by the assertion of a Fifth Amendment right against self-discrimination. Furthermore, these courts have held that information pertaining to foreign bank accounts is governed by the federal government’s “Required Records Doctrine.”
The initial investigation has shown that each of the five individuals had some type of financial interest in a foreign bank account. Information furnished to the grand jury includes the account holder’s name, the bank’s address, the number of other individuals who are associated with the account and the maximum balance of each account.
When a person is embroiled in a tax controversy, he or she may wish to discuss the case with an attorney who focuses on tax law. A knowledgeable tax attorney may be able to evaluate one’s case to determine whether federal law requires the disclosure of particular information. If criminal charges are pursued, the attorney may be able to pursue a variety of defenses.
Source: Bloomberg, “Grand Jury Probing Foreign Bank Accounts, U.S. Judge Says,” Patricia Hurtado and Christie Smythe, Feb. 19, 2013