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It has been reported that the IRS has shifted focus to auditing taxpayers who were previously denied entry into the Offshore Voluntary Disclosure Program (“OVDP”). Approximately 6,000 are in in focus. The IRS is also encouraging delinquent taxpayers to hurry into compliance if they have not already done so.

We encourage taxpayers who have been evaluating their options to make a decision and come into compliance. The IRS’s patience may be running thin. In addition, the IRS is receiving information from various sources, including exchange of information under FATCA. Once an audit begins, your options for penalty abatement may be limited.

Feel free to contact us with any questions or if you need assistance with your case. We are happy to assist. 


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The ICIJ released what is now known as the “Paradise Papers,” which claim to reveal tax avoidance strategies of the rich and famous. 1 In particular, the papers claim to:

  • Reveal offshore interests and activities of more than 120 politicians and world leaders, including Queen Elizabeth II, and 13 advisers, major donors and members of U.S. President Donald J. Trump's administration
  • Expose the tax engineering of more than 100 multinational corporations, including Apple, Nike and Botox-maker Allergan;
  • Reveal tax haven shopping sprees by multinational companies in Africa and Asia that use shell companies in Mauritius and Singapore to reduce taxes;
  • Shine a light on secretive deals and hidden companies connected to Glencore, the world’s largest commodity trader, and provides detailed accounts of the company’s negotiations in the Democratic Republic of the Congo for valuable mineral resources; and
  • Provide details of how owners of jets and yachts, including royalty and sports stars, used Isle of Man tax-avoidance structures.

Appleby appears to be the law firm at the heart of the leak. It is an offshore law firm with around 470 people, having 10 offices, primarily in offshore tax havens. It apparently had 31,000 US clients.

1 See

While many of items highlighted by the papers are legitimate tax planning strategies and therefore should not be correlated with a negative connotation notwithstanding media bias, we encourage our clients to review the release and to compare them with their tax filing obligations. Clients ensnared by the release of these documents should make sure they have filed all requisite forms with respect to their offshore holdings. The US requires substantial information reporting relating to offshore holdings and activities. Failure to file the appropriate forms may result in significant penalties. For example, willful intent to file an FBAR may result in penalties up to fifty percent (50%) of the account balance. We also encourage our clients that have any offshore holdings to review their historical compliance, notwithstanding the use of Appleby. It appears that attacks on offshore service providers will continue and may only get worse. The desire to obtain confidential information for political or nefarious gains is real and should be taken seriously.

Should you have any questions relating to this release or need assistance, feel free to contact us. We would be happy to assist.




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On April 03, 2016, the press reported that 11.5 million records were leaked from Panamanian law firm Mossack Fonseca. The records detail offshore holdings of the celebrities, politicians, and the mega-rich many of which were purportedly engaged in illegal activities including tax evasion. Such leaks have been referred to as the “Panama papers” or the “Wikileaks of the mega-rich” by some newspapers.[1] More details can be found at the website of the International Consortium of Investigative Journalists (“ICIJ”), which have summarized their findings as follows:

The largest cross-border journalism collaboration ever has uncovered a giant leak of documents from Mossack Fonseca, a global law firm based in Panama.

The secret files:

  • Include 11.5 million records, dating back nearly 40 years – making it the largest leak in offshore history. Contains details on more than 214,000 offshore entities connected to people in more than 200 countries and territories. Company owners in [sic] billionaires, sports stars, drug smugglers and fraudsters.
  • Reveal the offshore holdings 140 politicians and public officials around the world – including 12 current and former world leaders. Among them: the prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.
  • Document some $2 billion in transactions secretly shuffled through banks and shadow companies by associates of Russian President Vladimir Putin.
  • Include the names of at least 33 people and companies blacklisted by the U.S. government because of evidence that they’d been involved in wrongdoing, such as doing business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran.
  • Show how major banks have driven the creation of hard-to-trace companies in offshore havens. More than 500 banks their subsidiaries and their branches – including HSBC, UBS and Société Générale – created more than 15,000 offshore companies for their customers through Mossack Fonseca.[2]

We take this opportunity to remind our clients and friends of the benefits of voluntary disclosures to the Internal Revenue Service (“IRS”) and other tax authorities for those who may be affected by such leaks or otherwise are not in full tax compliance. In general, if a taxpayer voluntarily discloses mistakes to the tax authority, whether such non-compliance was willful, negligent, or an honest mistake, monetary penalties are generally substantially reduced (the amount of reduction of monetary penalties is generally dependent on the degree of culpability) and the taxpayer can avoid criminal liability. However, such reductions are premised on the fact that the disclosure is “voluntary.” In general, to be voluntary, the disclosure must be made before the taxpayer is audited by the tax authority and otherwise before the tax authority becomes or is aware of the non-compliance. As expected, we understand that some governments have already begun examining these leaks. Thus, time can be of the essence in these situations and any disclosures should be made promptly.




[1]           See Toppo, Greg, “Worldwide, jaws drop to Panama Papers’ Leak”, USA Today, last accessed April 3, 2016, available at:

[2]           See “Key Findings: The Panama Papers by the Numbers”, ICIJ, last accessed April 3, 2016, available at:



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This is a reminder to our clients and friends that there are two important deadlines for US tax and information reporting purposes that are coming soon. 

First, US tax residents that are individuals and who live abroad have until June 15, 2015 to file their US tax return (Form 1040) or an extension. Attached to Form 1040 must include Form 8938, “Statement of Special Foreign Financial Assets,” if you have a financial interest in “Specified Foreign Financial Assets” and you meet certain asset valuation thresholds. This requirement came into law as part of the Foreign Account Tax Compliance Act of 2010 (“FATCA”). Temporary regulations were issued in late 2011 and finalized in late 2014. Also, nonresident aliens may also have file a US income tax return (Form 1040NR) if they had US source income or were engaged in a US trade or business in 2014. The deadline is also June 15, 2015, unless you received wages subject to US income tax withholding. In that case, the deadline was April 15, 2015. As today is June 15, 2015, you should file an extension if you have not already done so or cannot file your US income tax return by the deadline. This extension will give you four extra months of time to file your US income tax return. Extensions are filed on Form 4868 “Application for Automatic Extension of Time To File US Individual Income Tax Return” and can be e-filed. 

Second, US tax residents must also file Form 114, “Report of Foreign Bank and Financial Accounts,” by June 30, 2015. 

Our Client Alert discusses these reporting obligations in more detail. 


InFBARFATCAInternational TaxOVDPTagsFBARForm 8938International TaxOVDP


By Armin Gray*

Credit Suisse AG pleaded guilty to conspiracy to aid and assist U.S. taxpayers with the filing of false income tax returns and other documents. Credit Suisse admitted to operating an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared financial accounts and concealing their offshore assets and income from the IRS, thus evading U.S. taxes. The bank has agreed to pay $2.6 billion to the U.S. government, which will be divided among several agencies. 

Although the agreement does not require that Credit Suisse provide names of its U.S. clients who had undisclosed accounts with the bank, which was required under the plea agreement made by UBS in 2009, Credit Suisse agreed to:

  • Promptly disclose all evidence and information described in Section II.D.I. and II.D.2 of the U.S-Swiss bank voluntary disclosure program, which includes making a complete disclosure of its cross-border activities and providing all information (including the debits and credits on a monthly basis) with respect to its U.S. accounts other than the name of the individual; 
  • Provide testimony or information for admission into evidence of documents or physical evidence of any criminal or other proceeding as requested; 
  • Provide all necessary information for the U.S. to draft treaty requests to seek account records and other account information; 
  • Close accounts of account holders who fail to come into compliance with U.S. reporting obligations; 
  • Implement procedures to ensure compliance with U.S. laws including those under F.A.T.C.A. and relevant tax treaties in all its current and future dealing with U.S. customers.
  • As such, those with undeclared Credit Suisse accounts should promptly seek the advise of a competent professional. 


* The following article was published in Insights, by Ruchelman P.L.L.C.  Insights was originally designed, created, and edited by Armin Gray. Kyu Kim of Kyu & A LLC, a design company, substantially assisted in its design as well. Co-authors originally included Fanny Karaman and Cheryl Magat. We thank them for their support.