The University of Rochester has gained unexpected notoriety recently as one of it’s professors faces sentencing in a criminal tax evasion scheme. The University professor pays a $100 Million FBAR penalty to the IRS for failure to disclose Swiss accounts while awaiting his sentence in February that may contain additional monetary fines as well as prison time. Dan Horsky, a professor emeritus at the NY University, amassed more than $200 million in offshore accounts at banks in Zurich Switzerland sourced by successful offshore start-up companies. Mr. Horsky failed to report the income to the IRS or disclose the accounts on mandatory IRS FBARs resulting in the 50% penalty and the specter of criminal prosecution.
Mr. Horsky took great efforts to hide his income and overseas activities in order to avoid paying the IRS taxes on these activities. As a result, he has paid more than he would have faced through either an OVDP disclosure or by simply paying the appropriate taxes as he went, as well as the loss of his career and personal disgrace. The U.S. attorneys who prosecuted his case were pleased with the settlement, and went on to warn “Today’s plea shows that we will continue to prosecute those who engage in this criminal activity.”
The IRS disclosed last month that it had so far collected more than $10 Billion in offshore related penalties as more than 100,000 US taxpayers have come into FBAR compliance via the Offshore Voluntary Disclosure Program or OVDP or streamlined domestic offshore procedures. The IRS continues to work through extensive offshore data transfers from foreign banks, institutions and sovereign tax authorities providing specific account, balance and transactional information associated with specific US taxpayers. We expect IRS audits to begin in earnest in an immediate time frame as the IRS completes the picture of individual offshore tax avoidance strategies for itself based upon the data provided by foreign institutions and tax agencies.
It may seem like the IRS is pursuing big fish only when a University professor pays a $100 Million FBAR penalty to the IRS, but that is a false perspective. The IRS will work their way down to all who violate FBAR compliance. It is not too late. If you have not yet come into FBAR compliance we invite you to contact us for a free consultation at 866-631-3470.