Off-Shore Accounts Fraud

International Tax Whistleblower Representation

Off-shore activity is commonly engaged in by U.S. citizens as part of our global economy. There are many instances where off-shore accounts are being used legitimately, enabling a corporation to do business overseas:

• Some countries require the establishment of a foreign corporation in order for an American company to do business there
• Some foreign governments require overseas investors to create partnerships or joint ventures with the government or a domestic partner
• Foreign trusts are often established to place assets under the control of competent managers when there is doubt about the ability of the beneficiaries to properly manage these assets – some foreign trusts also offer the additional benefit of operating under a legal environment which does not require taxes to be paid on income earned outside their borders

Though off-shore financial activity is legal, U.S. citizens and corporations are still legally required to pay taxes on income and assets in off-shore accounts in accordance with U.S. tax laws. Failure to do so may result in both civil and criminal penalties.

A Means to Hide Assets from the Government

Often, individuals and corporations will use off-shore accounts to illegally hide income streams and assets from the U.S. government in an effort to avoid taxation. Many foreign jurisdictions offer financial secrecy to attract investors that live in other countries. These jurisdictions are considered "tax havens" due to the fact that they provide financial secrecy and require little or no taxation of income earned outside their jurisdiction.

Types of entities and schemes used in abusive off-shore tax fraud practices include:

• Foreign trusts
• Foreign corporations
• Foreign (off-shore) partnerships, LLCs, AND LLPs
• International Business Companies (IBCs)
• Off-shore private annuities
• Private banking (U.S. and off-shore)
• Personal investment companies
• Captive insurance companies
• Off-shore bank accounts and credit cards
• Related-party loans

Abusive Off-Shore Schemes

Promoters of abusive off-shore schemes rely on the difficulty of access to the records of tax haven banks, attorneys, and trustees to avoid paying taxes on assets and income. Structures are often created that give the appearance that a foreign entity owns the assets, when a U.S. taxpayer is the actual owner. In many instances, records for these off-shore accounts are falsified or fabricated to accomplish this goal.

Taxpayers may exploit a variety of methods to cover up transfers of money or property to a foreign entity in order to hide the assets. Examples include:

• Skimming income to an off-shore account
• Using payments disguised as deductible expenses that are paid to entities controlled by the taxpayer but situated in a tax haven

To get the title to a property as well as its future earnings off-shore, taxpayers sometimes fabricate a sale of the property to a foreign entity in their control. Once assets or title to a property have been moved off-shore, sophisticated communication methods and fund transfers are then used to enable the taxpayer to manage the assets. Tax haven banks, trust companies, attorneys, and accountants can often create false documents intended to create a paper trail to confuse auditors.

Many schemes are designed with the intention of helping taxpayers hide the repatriation of funds moved off-shore in order to avoid taxation. Common methods of repatriating funds include:

• Credit cards which draw on the U.S. taxpayer's off-shore account
• Loans from mystery off-shore lenders
• Loans from domestic lenders in amounts beyond the taxpayer's borrowing power
• The use of property titled to off-shore entities at zero or below-market rental
• Bogus transactions designed to transfer funds to or from off-shore entities
• Gifts
• Scholarships for the taxpayer's children
• "Payable Through" accounts

Experienced Off-Shore Tax Fraud Whistleblower Representation

Kenney & McCafferty represents accountants, bankers, and money managers with knowledge of off-shore accounts tax fraud totaling $2 million or more. Our firm employs a former IRS Revenue Agent, who has been voted one of the top 100 practitioners before the IRS, as well as a former federal prosecutor who has prosecuted tax fraud claims in pursuing these tax claims.

If you have knowledge of off-shore accounts tax fraud totaling more than $2 million, please contact our tax whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.