After the IRS’s success with UBS and its new regulations coaxing secrets from foreign banks, it is no wonder many Americans have come forward to disclose foreign accounts and assets. After historic 2009 and 2011 voluntary disclosure programs, the IRS announced a third program that is still gathering participants.
More globally, the IRS is implementing FATCA, something the Obama administration feels strongly about. Despite significant foreign criticism, the system is changing the face of global financial reporting and disclosure.
The IRS and Justice Department have coupled the option of amnesty with the threat of punishment and are making examples of those who are not making amends. The latest example involves a British lawyer arrested on arrival at JFK. His alleged crime was helping wealthy Americans hide $10 million in Swiss accounts.
Federal authorities arrested Michael Little on charges for participating in an 11-year tax fraud scheme. Little may have assumed he had nothing to fear, believing that residing in England made him exempt to US tax law.
His alleged crimes date to August of 2001. Upon the death of a client named Seggerman, Little met with the deceased’s descendants at a New York hotel. Explaining there was $10 million of undeclared money, Little advised family members how to hide it from the IRS.
He allegedly suggested ways to send money to the U.S. without alerting the IRS, including travelers checks, art, and jewelry deals. With secrecy befitting a military operation, they used code words for communicating:
- “FDA” for the IRS;
- “Beef” for money;
- “Lbs” for units of $1,000;
- “Small” for Michael Little;
- “Moxly” for the Swiss lawyer;
- “Leaky” was the Seggerman Family matriarch;
- “BG” was a New Jersey accountant;
- “Rusty nail” was a trust; and
- A “Refrigerator” was an account to hold or transfer funds.
Mr. Little’s alleged scheme went on between 2001 and 2008. He even had a New Jersey accountant prepare false and fraudulent individual and corporate tax returns, the government claims. Little also allegedly sent millions surreptitiously to the U.S using several of his suggested techniques to avoid the IRS. He allegedly arranged a sham mortgage to allow one family member to access approximately $600,000 in overseas assets.
Although Little lives primarily in England, he maintains a residence in New York. He was charged with one count of conspiracy, carrying a maximum sentence of five years. Suzanne Seggerman previously pled guilty to conspiracy to defraud U.S. taxing authorities and to subscribing to false individual tax returns. She awaits sentencing.
This is surely not the last time we see these types of cases as the U.S. enforcement efforts continue to grow in reach and strength.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.