IRS Criminal Tax Cases 2016 – S. Hyatt

Saul Hyatt of Weston, CT, used a Panamanian bank account to conceal over $1.5m in income from the sale of duty-free alcohol and tobacco products He plead guilty (9/16) to one count of conspiring to conceal assets and income from the IRS in an undeclared bank account in Panama held for his benefit. Hyatt allegedly conspired with another individual in the US and others to conceal his assets and income derived from the sale of duty-free alcohol and tobacco products. To execute the scheme, Hyatt used a registered Panamanian corporation, Centennial Group, to buy and sell the duty-free products.

From 2006-2012, Hyatt directed that $1.6m+ in profits from the sale of the duty-free products be wired to his undeclared bank account in Panama. Hyatt repatriated the money to buy a Mercedes Benz and to pay for $19,000 in interior design goods and services. Hyatt failed to report income earned on his Panamanian account and failed to file an FBAR for the years at issue. Hyatt admitted that the scheme resulted in a tax loss of $521,986.

U.S. persons are required to report to the IRS Form 1040/Schedule B/Part 3 any financial interest in, or signature authority over, a financial account in a foreign country (Line #7). In addition, the US persons must report all income earned from foreign financial accounts (on Form 1040), and if the accounts have an aggregate value of more than $10,000 at any time during the calendar year, file with the Department of Treasury FinCEN Form 114 (Report of Foreign Bank and Financial Account/FBAR).

Hyatt faces sentencing on 1/6/17. He faces a maximum sentence of 5 years in jail (instead of the 10 year penalty for willful failure to file an FBAR). Hyatt has agreed to file true and accurate tax returns and to pay the IRS all taxes and penalties owed. In addition he has agreed to pay the 50% FBAR penalty for failure to disclose his foreign accounts which FBAR penalty amounts to $850k+( 50% of the undisclosed $1.6m+ account)

Caroline D. Ciraolo, Asst. Atty. Gen., Head of the US Dept of Justice Tax Division stated: “The Dept. continues to vigorously pursue and prosecute those who conceal their assets and income in offshore accounts in an effort to evade paying their fair share of taxes.”

Paul J. Fishman, US Atty. For the District of New Jersey, stated: “The Panamian banking system should not be a haven to hide profits made from US businesses. When American taxpayers use foreign bank accounts to hide their assets, we will investigate and prosecute them to the fullest extent of the law.”

IRS CID Special Agent, Jonathan D. Larsen stated: “Concealing income and assets offshore is not tax planning. Plain and simple, this is international tax fraud. The facts in this case are clear.”

Mr. Hyatt earned income though the sale of duty-free alcohol and tobacco products and intentionally had over $1.6m in profits wired into an undeclared offshore bank account in Panama. Today’s plea shows how determined we are at the IRS and the DOJ in uncovering this type of international tax fraud and putting a stop to it.”

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