A Mizrahi Bank customer pled guilty to filing a false tax return in connection with an undisclosed criminal tax investigation of undisclosed foreign accounts. According to a tax lawyers have seen in the past.
The problem with this scheme is that when uncovered, it provides clear evidence of criminal tax evasion. To add insult to injury, when he filed his tax returns not only did he not report the interest income generated on the Mizrahi Bank account in Israel, he deducted the interest he paid to the Mizrahi Bank branch in Israel as a business deduction. The unreported interest income amounted to approximately $282,000.
Then in March 2013, Hakimijoo was scheduled to be interviewed by Justice Department criminal tax attorneys and IRS special agents from the Criminal Investigation Division. In preparation for the interview Hakimijoo’s counsel provided copies of amended income tax returns to the special agents and the Department of Justice attorneys. At the interview Hakimijoo was asked if he filed the amended tax returns, and he responded that he had. Unfortunately for Hakimijoo when the IRS subsequently checked its files it turned out that the returns had not been filed. When the IRS asked for proof that the payments shown on the amended tax returns were actually made, no proof was provided. It’s hard to believe that even at the point where it was clear that he was in the IRS’ crosshairs he thought that the best tactic was to lie about a fact that was easily verifiable by the IRS. It really makes you wonder!
Hakimijoo faces a maximum prison term of three years and a fine of $250,000. In addition, Hakimijoo agreed to pay a civil FBAR (Foreign Bank Account Report) penalty to the IRS of 50% of the highest balance in his share of the account, amounting to a penalty of approximately 1 million dollars.
It is an open question as to how Hakimijoo’s brother who apparently had a ½ interest in the Israeli account will fare since as of yet our tax lawyers have not seen any publicly available information about his fate.
If you have an unreported bank account in Israel, Switzerland or any other country, now is the time to consult an Click here to Subscribe to the Free Online Publication, The Tax Terminator. It will keep you abreast of events that are making the news and perhaps affecting you or your business.