Another U.S. taxpayer with an offshore HSBC bank account pleads guilty

On April 13, 2011, another U.S. taxpayer with an offshore HSBC bank account, Josephine Bhasin (United States v. Bhasin, E.D.N.Y., No. 11-cr-00268-ADS), pled guilty to charges of knowingly filing false tax returns, false amended tax returns, and false FBARs.

According to court documents, Ms. Bhasin of Huntington, NY, filed a false individual income tax return for 2008 that failed to include a Schedule B reporting her interest in or signature authority over foreign financial accounts at HSBC India. In 2008, Bhasin’s bank accounts at HSBC India were valued at approximately $8.3 million. The 2008 income tax return was further false because it reported, on Line 8a, interest income of only $1,257.16, whereas during 2008 Bhasin actually earned approximately $169,000 of interest income on certificates of deposit maintained at HSBC India.

In court Bhasin admitted that after being contacted by attorneys for the Justice Department’s Tax Division on July 15, 2010, she filed a false Report of Foreign Bank and Financial Accounts (FBAR) for 2009 and a false amended tax return for 2009 that reported ownership of a foreign bank account in India holding only $49,000. In addition, Bhasin also admitted that in September 2010 she filed similar false FBARs for 2007 and 2008.

At sentencing, Bhasin faces a maximum sentence of three years in prison and a maximum fine of $250,000, or twice the amount of financial gain to the defendant or loss to the Internal Revenue Service (IRS). Additionally, Bhasin has agreed to pay a 50 percent civil penalty based on the year with the highest aggregate account balance between 2004 and 2009 for failing to file FBARs relating to her undeclared bank accounts.

Separately a request to serve a Summons has been granted on behalf of the Internal Revenue Service (IRS) against HSBC. The Summons has been a useful weapon in the government’s arsenal; information gathered is being used to build cases against U.S. taxpayers. It is believed that HSBC will provide thousands of customer names soon.

Our law office, which represents many taxpayers throughout the U.S. and around the world with undisclosed offshore accounts, believes that the recent indictments and large penalties should encourage more U.S. taxpayers with undisclosed offshore accounts, especially held at HSBC, to come forward before the government contacts them. The 2011 Offshore Voluntary Disclosure Initiative offers amnesty and is only open until August 31, 2011. It is critical for taxpayers to come forward before the bank identifies them to the Department of Justice and the IRS if they want to minimize their penalties and criminal exposure.

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