Tax Dodgers Beware: The IRS Continues to Gain Access to Offshore Accounts

Tax Dodgers Beware

by Harry Galstian

July 28, 2016

The use of offshore accounts to avoid taxes is not particularly new. However, in a globalized world, are they still a safe way for tax dodgers to hide their income? Check out some of these recent tax scandals to see.

Targeted Billionaires

One of the biggest recent stories has been the tax evasion trial of ex-billionaire Sam Wyly. The former owner of Michaels Stores, Inc. and Sterling Commerce has been accused of concealing over one billion dollars in offshore accounts. He and his brother Charles (deceased) claim the use of offshore tax havens was the result of bad legal and accounting advice. However, accepting bad advice doesn’t necessarily leave you unscathed. Judge Barbara Houser agreed, finding Wyly guilty of tax evasion and in debt to the IRS for hundreds of millions of dollars.

Beyond Swiss Banks

Last month, Michele Bergantino was convicted of assisting United States citizens with concealing over four billion dollars in Swiss tax havens to avoid paying taxes. Despite Bergantino being an Italian citizen living in Switzerland, he has been convicted by the IRS and will be extradited to America to serve up to five years in prison. And Swiss accounts aren’t the only financial institutions under scrutiny.

This June the IRS obtained account documents for Ching-Ye Hsiaw from UBS AG, a Swiss bank. An American citizen residing in China, Hsiaw has avoided paying income tax to the IRS by hiding money in offshore accounts. These records showed bank transfers to an institution in Singapore. Traditionally, Singapore will not provide banking information without the written consent of the account owner, but, under international comity, governments can operate under the laws of the accusing country. This means Singapore’s bank secrecy laws will not protect American citizens.

National Crackdowns

Last week, Argentine soccer star Lionel Messi was convicted of tax evasion by a Spanish court. He and his father were accused of funneling income from royalties and sponsorship deals to banks in Belize and Uruguay to avoid taxes. While Messi claimed ignorance of his financial dealings, the Spanish courts decided that ignorance was not a defense and sentenced Messi to 21 months in jail, along with the payment of back taxes.

Violators: Offshore Accounts Not Worth the Risk

Any US citizen must report any and all income, whether foreign or domestic when tax time hits. But that’s not all. Any individual with a financial interest or signature authority over foreign financial accounts must file a Foreign Bank and Financial Accounts (FBAR) statement. Failure to report foreign income or accounts may lead to prosecution and be considered tax evasion, plain and simple.

In this era of increasing globalization, offshore accounts are no longer an undetected way of dodging taxes. And with international agreements that allow countries to bend the rules for foreign entities, there are few laws that can protect your private, offshore assets. Instead, avoid the risk of bankruptcy penalties and possible jail time and make sure your accounts are in line with the IRS.

Do you have an offshore or a foreign bank account and owe back taxes?  You have options. Contact Direct Tax Relief and inquire about the IRS Streamline Filing Compliance Procedure that might be the best approach for your tax situation.


The IRS closed the Offshore Voluntary Disclosure Program in early 2018.  Since the program started over 56,000 taxpayers utilized the program to voluntarily comply and pay over $11 billion back taxes, interest, and penalties.


  • Sam Wyly
  • Michele Bergantino
  • Ching-Ye Hsaiw
  • Lionel Messi
  • Offshore Voluntary Disclosure Program:
  • Streamlined Filing Compliance