Many American citizens keep foreign bank accounts for business or personal reasons, often relying on foreign bank secrecy laws (or assuming that they will benefit from those secrecy laws). Those foreign account holders must be aware of some major differences between secrecy of bank records in the United States and other countries.

The main issue is that in the United States bank records are not privileged, not protected, and are open for inspection by the government. There is very little you can do to keep government investigators away from your bank records. Additionally, banks must report some transactions to the government, such as cash deposits of $10,000 or more.

Many other countries, on the other hand, take bank account privacy much more seriously. One good example, obviously, is Switzerland. The Swiss Banking Code makes it a crime for banks or their employees to divulge secrets entrusted to them by their customers, including bank account information. It is also a serious crime under the Swiss law to obtain secret bank information or secret business information in order to pass it on to a foreign government or an organization. Bank customers whose privacy rights have been violated by divulging their secret banking and business information may sue for damages in Swiss courts.

In the past, many U.S. taxpayers had used European and other countries enhanced banking privacy laws to avoid tax liability in the United States. In order to avoid clashes between court systems, the U.S. entered into tax treaties with some countries, most importantly with Switzerland. The two principal US-Swiss agreements in this area are the United States – Switzerland Income Tax Convention and the Swiss-United States Treaty on Mutual Assistance in Criminal Matters.

Even with these treaties, there is no automatic cooperation by the Swiss with the U.S. law enforcement. The Swiss will not assist the American government if the investigation or criminal charges involve tax evasion but they will provide help in cases of tax fraud, the difference being that fraud (as understood by the Swiss) involves more affirmative steps, such as falsifying records.

There are also similar treaties between the United States and some other countries.

It is important to understand that any secret banking information obtained by the US government, even in violation of the laws of the country in which the information was obtained will be admissible in the U.S. courts. For example, the Supreme Court ruled in the U.S. v. Payner that bank records protected under the laws of the Cayman Islands which had been stolen from a bank vice-president were admissible in court.

If you want to discuss issues related to foreign bank accounts with our New York based white collar defense attorneys, call us today at (212) 577 6677 to schedule an immediate consultation.

There are numerous federal laws and regulations that criminalize tax fraud. Particularly, 18, U.S.C. §§ 286, 287, 371, and 1341. Although there are many situations where one arguably committed tax fraud, triggering an IRS investigation, it doesn’t mean that every investigation will result in criminal prosecution.

The IRS handles its investigations on two level – administrative and criminal. The administrative branch may conduct audits and make fraud referrals to the IRS Criminal Investigation division. Sometimes, a criminal tax investigation is triggered by referrals from other law enforcement agencies, or even third party reports.

If the subject of an IRS investigation is aware of it, every possibility should be used to prevent this investigation from turning into a criminal matter.

Once a matter is sent to the criminal investigations, it is assigned to an IRS special agent who will investigate the case further. Once the investigation is over, the agent will prepare a report recommending prosecution. The agent’s supervisors then review the report and if it is approved, the case is sent over either to the US Attorneys or the Department of Justice Tax Division for prosecution.

Sometimes, criminal tax cases may be investigated by the local US Attorney’s Office and put into grand jury without the IRS involvement, although such an action must be approved by the Department of Justice Tax Department first.

In short, tax matters, with some exceptions, rarely end up in criminal prosecutions and often a capable defense attorney may be able to prevent that if many cases, working out an administrative resolution, before charges are brought.

Because New York is a major business center a large number of tax investigations and prosecutions take place here. If you have been the target of tax investigation by the IRS or another government agency in New York, call our New York defense lawyers today at (212) 577 6677 to schedule an immediate consultation.

Many Americans feel that having foreign bank accounts is a “tax haven” to protect his or her own money from being reported to the IRS during filing tax season or feel that foreign bank secrecy policies can help them hide financial information from the US government. There are a number of foreign banks such as the Swiss Bank, offers secrecy and “tax havens” but it does not protect clients all the times.

Under the Bank Secrecy Act (BSA) of 1970, foreign institutions can cooperate with the US government to provide foreign bank account information if the US government has legitimate reasons, such as criminal investigations.

Some common criminal investigations include Money Laundering, Tax Evasion, Mail Fraud, Wire Fraud, Black market operations and many more. According to US Department of Treasury, Switzerland and the United States cooperated on an agreement in an effort to fight against these illicit activities in 2003. Swiss banks will turn over information if it finds any type of suspicious fraudulent activities.

With cooperation, financial institutions usually provide clients’ financial reports to the US government for investigations and five common types of reports include

1)    Currency Transaction Report (CTR)

2)    International Transportation of Currency or Monetary instruments (CMIR)

3)    Report on foreign bank and financial accounts (FBAR)

4)    Suspicious activity reports (SAR) (A financial institution is not allowed to tell the client that a SAR report is being filed or else face penalties.

5)    Designation of exempt person report

Based on these reports, investigators will monitor cash flow, bank activities, and analyze on patterns of suspicious transactions to see if any violates U.S. federal laws. When U.S. court finds that funds are coming from criminal activities, foreign banks are required to release information on the account owner. If foreign bank officials do not disclose such information, thereby, violating the Bank Secrecy Act, they will face severe penalty fine and possible imprisonment.

If you feel that foreign banks’ secrecy policies may protect you from US. Government investigations, it is not exactly true. When you are under investigation, the US government has the right to defer foreign laws that protect your personal information.

If you feel that you are under investigation by the federal government for your overseas banking activities, call our New York City Federal Defense Attorneys immediately at (212)577-6677 for legal advice.

According to the US Attorney Manual, prosecution can be dismissed under most conditions, only with the written approval of the Tax Division, who must concur with the judgment of the United State Attorney that requests the dismissal.  The only exceptions to this rule are if the defendant dies or another superseding indictment is handed down from the grand jury.

Consequently, this same procedure applies to the Tax Division declining to prosecute a tax issue. The US Attorney should file a request for reconsideration, in writing, to pursue further prosecution.  Prosecution can only be declined if a grand jury finds no reason to investigate the matter or if the US Attorney requests that the prosecution be dismissed.  In the event that the grand jury finds no grounds to prosecute the tax matter, the government may not present the matter to another grand jury for investigation.

While it may be difficult to convince the prosecution to dismiss your New York federal criminal case, a white collar defense lawyer in New York can provide you with representation throughout the investigation process and ensure that the prosecution of your tax matter is handled fairly.  Call our New York criminal tax lawyers at (212) 577-6677 today to set up an immediate consultation.

Each year, many people fail to file their New York  tax return for any of several reasons.  Among these people, most usually meant to file, but didn’t because they were too busy with work and life to meet the deadline or because they were too overwhelmed by the endless complexities of the system.

Unfortunately, a failure to file often looks to investigators like an attempt at tax evasion.

Tax evasion is a deliberate attempt to avoid paying required taxes.  Title 27, Section 7201 of the United States Code defines tax evasion as any willful attempt “to evade or defeat any tax imposed by this title or the payment thereof.”  Failure to file tax return is also a crime in New York. It’s a serious offense that could have real consequences, especially if you don’t get legal help immediately.

Most personal income tax returns are due April 15^th of the year following the relevant financial activity: you’ll need to report all 2010 income by April 15, 2011.

However, some tax forms have deadlines on other dates.  As an example, off-shore bank accounts must be reported on a separate form by June 30^th, but other forms that may be relevant to you could be due before April.  Contact a tax law attorney with any questions as to which forms and deadlines you need to follow.

If you do miss a deadline, you could be charged with the criminal tax evasion.  The federal law categorizes the offense as a felony, punishable by fines of up to $250,000 for individuals or $500,000 for corporations, as well as imprisonment for up to five years.

On top of all that, you would probably also be required to reimburse the government for whatever it cost them to prosecute you.

If you know you won’t be able to meet a tax filing deadline, there may extensions available. These ironically require almost as much paperwork as the tax forms themselves, but again, a tax law attorney could help to guide you through them.

It’s important to note that tax evasion is only a crime when it is “willful.”  If you mailed your form in January, February, March, or even early April, but then it got lost in the mail, you could still be charged but you should not be convicted.  You actions would not have met the legal requirements for criminal liability.

In a situation like this, or in any other where you might find yourself innocent but accused, you should retain a qualified defense attorney right away.  Your attorney can argue your case professionally and make sure you are not wrongfully convicted.

If you did knowingly try to get out of paying taxes, you’re not alone.  In today’s economy, many people are desperate to keep a little more money in their pockets.  To avoid the truly damaging legal penalties, you too should consult an attorney as soon as possible.  Legal defense is usually most effective at the early stages of proceedings, before the prosecution has completed their investigation and perfected their arguments against you.

Tax evasion is often a reality in this depressed economy.  If you or someone you know may be struggling with a tax evasion issue in New York, a good tax fraud defense attorney could be the solution to your problems. You can call our New York City tax fraud defense lawyers today at (212) 577 6677 to discuss your case.

Filing a tax return can be one of the most stressful tasks that people face all year.  That complicated maze of forms, deductions, withholding… it just never gets any easier.

Sometimes, even with the best of intentions, mistakes can be made.  Alternatively, especially in this rough economy, it can be tempting to fudge your numbers just a little.  What can happen if you’re caught in one of these two scenarios?

Well, the take-home point is that the dividing line between these situations is the dividing line used by tax fraud investigators and prosecutors when they make their decisions on when to press charges.  By the legal definition, tax fraud is an intentional crime.  In other words, an unintended misrepresentation on your return is not illegal if it was really an honest mistake.

In a variety of different tax matters, real mistakes can unfortunately look like willful fraud to investigators.  If you are facing an investigation or charges even though you filed your information as honestly as you could, you need to retain an attorney who can assert your rights and ensure that you are not convicted of a crime you did not commit.

For those of you who did happen to sweeten the numbers in your favor, it’s also crucial that you retain an attorney right away.  Often, a legal professional will be able to negotiate with the prosecutors and thereby have your penalties significantly decreased.

If you are contacted by investigators, you would be well advised to seek legal counsel before responding to any of their questions or demands.  You don’t want to say anything that could make your situation worse than necessary, so leave the communication to your attorney, the expert.

For intentional tax fraud, the possible penalties include expensive fines and even time behind bars.

United States Code, Title 26, Section 7206 is the law that sets out the specific penalties for tax fraud.  They are as follows: fines up to $250,000 for individuals or up to $500,000 for corporations, and imprisonment for up to three years.

As a final kick after you’re down, the law adds that charges associated with prosecution can be taken out of your pocket.

The statute of limitations on most tax fraud crimes is either three or six years from the date your return should have been filed or the date your payment was due.  Prosecutors can secure an additional nine months after filing a criminal complaint against you.  Still, if your tax fraud offense was in the distant past, you will probably not face charges.

In conclusion, tax crime penalties are severe and should be taken seriously.  Although unintentional mistakes should not lead to convictions, they can often leave you vulnerable to prosecution at the very least. Contact a professional defense attorney in any situation where you may be facing charges, but do your best to make sure your taxes are right from the start.

If you need help with a criminal tax law issue in New York, consult our NYC tax fraud defense lawyers at (212) 577 6677 as soon as possible.

A net-worth investigation is another term for tax evasion investigation, which refers to an investigative method frequently used by the Internal Revenue Service (IRS) or the New York State Department of Taxation and Finance to prove taxable income in civil and criminal income tax evasion cases.

The method usually involves a determination of the taxpayer’s net worth at the beginning and at the end of a taxable year, computing the increase or decrease In net worth, and then adjusting this amount for nondeductible and nontaxable items. Ideally the amount resulting from this method is taxable income. By comparing it with the income reported on the alleged perpetrator’s taxable income, the tax fraud agent will determine whether filing is suspicious fraud or not based on the number’s discrepancy.

An obstacle, many of our clients run into when charged with tax evasion is that they maintain no books and records or that they run a cash based business, which in turn would cause legal officials to overstate their net-worth in order to receive more restitution or charge more penalties. Solutions to such problems, usually involves hiring a private accountant to adjust the overstatement for nontaxable income, or to carry the loss forward to the prosecution years and reduce the alleged tax deficiency as much as possible.

But depending on the facts of each case, such defenses may or may not pertain to the tax fraud charges being held against you. What our office does advise for every defendant charged, is to refrain yourself from making an admission without an attorney present.

Specifically for clients who are accused of tax evasion and operate on cash based business, the admission of the defendant has more standing than the estimated net-worth government tax agents can provide.

If you are investigated for tax crimes in New York, you should call an experienced New York criminal attorney at the onset of the investigation.  With any questions regarding defense to tax fraud cases in New York City, call our office at (212) 577-6677 to get professional legal assistance.

Informally known as the “Helmsley Loophole”, or formally know as CPL §40.20(2), which states that a person may not be separately prosecuted for two offenses based upon the same act or criminal transaction, will be eliminated from New York State Law.

What does this mean?

The Helmsley Loophole is a defense used in many New York State prosecuted tax evasion cases. The loophole shielded defendants from New York State prosecutions for tax evasion based on the same criminal transactions for which they were tried separately in federal court. Based on this loophole, New York State courts had generally dismissed state tax charges under double jeopardy grounds because the defendant is being prosecuted in federal court for the tax evasion stemming from the same criminal transaction.

But with the new legislation, New York State’s Taxation and Finance investigators are ready to start new files against defendants for tax evasion and fraud. New York State prosecutors are permitted to indict perpetrators who have already been charged in federal court for separate, but related federal tax crimes as long as the crime was committed within New York jurisdiction.

Not only is the new legislation going into effect, a new Taxpayer Protection Bureau is also being established within the New York Attorney General’s Office to help regulate such tax irregularities.

At Joseph Potashnik & Associates, we have a panel of some of the most skilled New York State and federal criminal defense attorneys specializing in various areas of federal and New York State tax evasion defenses.

If you are being investigated for tax evasion charges in New York City, then call our office at (212) 577-6677 to get professional legal advice.

Yes. Selling Virginia taxed cigarettes is considered to be cigarette smuggling in New York, if the carton of cigarettes do not possess a New York State tax stamp. In order to sell a carton of cigarettes in New York City, the carton must possess a New York State tax stamp otherwise; this is interpreted to be evading New York state and local taxes.

Higher New York State Cigarette Taxes = Lower Profit To Sales

In recent news, three individuals were arrested for charges engaging in the sale of untaxed cigarettes. Despite having cartons of cigarettes taxed by Virginia, which ranges from 15 to 65 cents per carton depending on the county, they were not taxed in New York and the alleged offenders were selling them at New York City prices.

Like many tax evasion cases, New York State takes such actions very seriously. Cigarette smuggling is defined as a violation of New York State Tax Law 1814, also known as the Cigarette and Tobacco Products Tax.

Once the investigation on cigarette smuggling is instigated, detectives from the District Attorney’s Crimes Against Revenue Unit will not hesitate to make the arrest once sufficient evidence is gathered.

Cigarette smuggling carries serious consequences in New York State, such as extensively long jail time and hefty fines in addition to reparations for lost taxes. It is therefore, essential to contact an experienced and skillful criminal defense attorney at the minute you become aware of an investigation. This will not only minimize your risk of self-incrimination but it will also optimize your defense.

If you are currently being investigated or arrested for violating the New York State Tax 1814, call our office at (212) 577-6677 for professional legal advice.

Although each individual case is addressed based on its own facts and there is generally no litmus test to guarantee the outcome of a certain case, there are certain facts within certain tax fraud cases that investigators will take into consideration and opt for criminal prosecution.

In order for an investigator to refer the case to the New York State District Attorney’s Office, he/she must examine the seriousness of the tax fraud or misconduct, which is determined through:

• The size of the tax loss involved.
• If the loss stems from multiple tax types.
• Whether the loss persists over multiple time periods or for multiple taxpayers.
• Whether the fraudulent tax activity is combined with other fraud or illegality.
• The reasons for the fraud and the degree of venality displayed.
• Factors relating to the taxpayer or the subject of the inquiry:

Early on in the case, an investigative agent will contact the person they suspect of fraud and audit them for more information. Generally, the agent will audit the offender for information they don’t have. So, it is within the best interest of the offender to contact a New York State Criminal Defense Attorney before submitting any documents to the New York State Department of Taxation and Finance.  This will prevent the offender from incriminating himself and will probably mitigate/dismiss the charges for the offender (depending on the case).

If you are being investigated or arrested for tax fraud in New York State, then call our office at (212) 577-6677 to get professional legal advice.