United States v. Paul Manafort and Robert Gates: An Offshore Tax Evasion Case
On October 27, 2017, the Government filed criminal charges against former Trump aides, Paul J. Manafort and Richard W. Gates, III. While these are only allegations and all defendants should be considered innocent until otherwise proven, the case provides some important lessons in offshore compliance cases. I expect that many with undisclosed offshore assets will be unnerved by this case, but hopefully by understanding the particular facts in this case, such individuals won’t jump to conclusions about the best way to proceed in their situation.
There are a number of federal charges in the case, so I will try to discuss only the facts as they relate to offshore tax non-compliance.
IRS Audits of Streamlined Applications
A question that’s asked by every client in a streamlined compliance filing is: “will I get audited?” This article will hopefully shed some light.
Here’s what the IRS says:
Returns submitted under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures will not be subject to IRS audit automatically, but they may be selected for audit under the existing audit selection processes applicable to any U. S. tax return and may also be subject to verification procedures in that the accuracy and completeness of submissions may be checked against information received from banks, financial advisors, and other sources.
Foreign Life Insurance Taxation
Life insurance can be good way to ensure that loved ones are taken care of in the event of an unfortunate situation. However, owning a foreign life insurance policy with cash value can prove to be more of a headache than it’s worth. We’ve come across such types of investments regularly in our offshore compliance cases; the reporting and tax obligations can be burdensome. Hopefully, this article will help foreign insurance policy owners understand their U.S. tax obligations.
How much does a Streamlined Case Cost?
OVDPs are a rarity compared to streamlined cases. It is quite rare for a case to have the willfulness elements that require such a drastic solution. We’ve had clients call us after speaking to other tax practitioners who recommended they file under OVDP where the recommendation made no sense. It was overkill. We’d like to believe the attorney was doing what they thought was right, and not that they were recommending unnecessary procedures to pad their fees. Unfortunately, we often hear the same stories about the same few practitioners. In one case, the client was recommended to file OVDP where the client’s non-compliance was only in one year and it was relatively minor. Read Stephen Dunn’s book on offshore accounts compliance to hear about some of his similar experiences.