United States’ government continues to track down tax evaders with offshore accounts under FATCA (Foreign Account Tax Compliance Act), which not only requires individuals to report their financial accounts held outside of the United States, but also compels foreign financial institutions to report to the Internal Revenue Service (IRS) about their American clients. Ty Warner, the creator of popular animal-shaped bean bags known as Beanie Babies, is in the news for evading taxes with the use of offshore Swiss accounts.

Mr. Warner maintained an account in UBS (Union Bank of Switzerland) from 1996 to 2002. When his balance reached $94 million in 2002, Warner transferred it to Zurcher Kantonalbank, another Swiss Bank. The latter account was held under the name Molani foundation to hide any tax liability. The Justice Department stated that the unpaid tax on this account totaled to $885,300 on $3.2 million in interest income.

On Wednesday, September 18, Department of Justice announced that Warner will plead guilty to tax evasion. Prosecutors state that he will pay $53.6 million total in back taxes and penalties, the largest offshore penalty ever reported. He also potentially faces a jail term of up to five years.

Apart from being the creator of Beanie Babies, Warner also owns numerous luxury hotels and resorts in the U.S., including the Four Seasons hotel in New York. His net worth is approximated as $2.6 billion by Forbes. He is one of the many businessmen who are in the process of being charged for tax evasion through offshore accounts.

In 2009, After UBS admitted to helping taxpayers hide money abroad, it paid $780 million in penalties and divulged 4,000 names to the U.S. authorities to evade criminal charges. More than 80 U.S. taxpayers have since been charged for related offenses.

The US reached a deal last month with Switzerland which allows many Swiss banks to come clean by paying penalties and disclosing names of errant clients. Upwards of 38,000 U.S. taxpayers have filed for voluntary disclosure of their assets. Even though the taxpayers who disclose their accounts to pay penalties, they can dodge criminal charges. In several cases, judges showed leniency towards taxpayers who came forward before learning that they are under investigation.

Vic Abajian is a former IRS attorney and known offshore bank account lawyer. He continues to assist clients in making disclosures to the IRS under the 2012 OVDP and through other means. UBS and other Swiss banks are currently in the process of turning over additional names of U.S. account holders. The time to make a disclosure expires when the IRS obtains your information. Accordingly, analyzing your options in a timely manner is critical. Vic represents dozens of clients with accounts at UBS and other Swiss banks within the 2012 OVDP, currently under IRS civil audit and those being criminally prosecuted.

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