2 criminal charges that could result from the Paradise Papers

The Paradise Papers, like the Panama Papers before them, were released in an effort to bring attention to the use of offshore accounts. As noted in previous posts, these accounts are not illegal. Issues arise if the account holder is making use of the account in an attempt to hide assets from the Internal Revenue Service (IRS).

When do criminal charges result from offshore accounts? Although the accounts themselves are not illegal, improper use can cause problems. Various criminal charges can apply if the IRS is concerned an individual is attempting to hide assets. The papers noted above could result in fodder for the IRS to consider an investigation. 

What types of charges could result from an investigation by the IRS? Two examples include:

• Tax evasion. These charges generally involve allegations that the accused did not meet his or her tax obligations. This can include accusations that an individual concealed the presence of these accounts and failed to file required tax forms like a Foreign Bank Account Report (FBAR). Penalties can include imprisonment and asset forfeiture.
• Money laundering. This crime essentially entails allegations that the asset owner moved assets around in an attempt to disguise the money’s original source of origin. This type of charge generally involves additional allegations that tie the money to other forms of criminal activity, like organized crime or drug crimes.

Allegations of these crimes are serious matters. There are defenses to these claims. As such, it is wise to seek legal counsel if contacted by the IRS.