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Zaher Fallahi, Tax Attorney and CPA; Hiding Money or Income Offshore Among the “Dirty Dozen” List of Tax Scams for the 2015 Filing Season

posted Feb 1, 2015, 9:41 PM by Zaher Fallahi

The IRS indicated avoiding taxes by hiding money or assets in offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the current year filing season.

"The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 50,000 voluntary disclosures and we have collected more than $7 billion from this initiative alone.  The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

The IRS remains committed to our priority efforts to stop offshore tax evasion wherever it occurs.  Even though the IRS has faced several years of budget reductions, including shutting down their civil investigation section in London, Frankfort and Paris, the IRS continues to pursue cases in all parts of the world, regardless of whether the person hiding money overseas chooses any banks.

Through the years, offshore accounts in various financial institutions have been used to lure US taxpayers into scams and schemes.

The IRS’s annual “Dirty Dozen” lists of common scams that taxpayers may encounter usually peak during filing season as people prepare their tax returns or hire professionals to assist in the process. Illegal scams can lead to substantial civil and perhaps criminal penalties, interest and potential criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to uncover and shut down scams and prosecute the criminals behind them. Zaher Fallahi, Tax Attorney and CPA

Hiding Income Offshore

Over the years, especially since 2009, many taxpayers have been identified as evading U.S. taxes by hiding income in offshore accounts or nominee entities or foreign trusts and then using debit cards, credit cards or wire transfers to access the funds. Some have employed employee-leasing schemes, private annuities or insurance plans by advice from unscrupulous advisors for illegal purposes.

The IRS utilizes information obtained from investigating taxpayers with undisclosed offshore accounts, as well as bankers and advisors suspected of coaching customers hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to criminally prosecute such tax evasion cases.

While there is nothing wrong with maintaining financial accounts offshore, there are US reporting requirements that must be done timely.

Since 2009, tens of thousands of individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the new OVDP and then modified it on June 18, 2014, (OVDP) following continued interest from taxpayers and tax professionals after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Zaher Fallahi, Tax Attorney and CPA, assists clients with  tax preparation, tax planning, IRS representation, disclosing undeclared foreign bank accounts (offshore voluntary disclosure program, OVDP), report of foreign bank & financial accounts (FBAR, Foreign Account Tax Compliance Act (FATCA), Telephones:  (310) 719-1040 (Los Angeles), ( 714) 546-4272 (Orange County) or e-mail: