Is the IRS narrowing their boundaries?  It appears so.

It was announced by the US Department of Justice (DoJ) in the last few days that Alexi Iazlovsky, a US citizen from Potomac, Maryland, pleaded guilty to filing a false return for the 2008 calendar year.

According to court documents, Mr. Iazlovsky, a US citizen, maintained an undeclared bank account held in the name of a foreign corporation at the Luxembourg branch of an Israeli bank. Mr. Iazlovsky owned a corporation that produced documentaries for Russian television stations. A tax return preparer suggested to Mr. Iazlovsky that he could reduce his taxes by keeping money out of the United States and diverting payments from his Russian clients to a foreign bank account held in the name of a foreign corporation. The DoJ further reported that Mr. Iazlovsky transferred a total of $2.6 million in untaxed payments from his Russian clients to his bank account in Luxembourg.  He also omitted the income diverted to and generated by the undeclared account in Luxembourg with a tax loss of more than $400,000.

Mr. Iazlovsky is the latest in a series of defendants charged with failing to report income from undeclared accounts held at Israeli banks.

This is further evidence that the IRS is not confining its search for individuals with ties to foreign bank accounts to outside their borders; they are looking within as well.  Richard Weber, Chief of IRS Criminal Investigations, declared, “Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax fraud, and you can expect us to use all of our enforcement tools to stop this abuse.”

The IRS will continue to investigate and actively pursue individuals who “cheat their country” no matter where they are in the world.

As a reminder, US Persons (citizens, residents and green card holders) who have an interest in, signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on their individual income tax returns. Additionally, US Persons must file a Report of Foreign Bank and Financial Reports (FBAR) with the US Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority, no matter where they live.  Here is further information on our website about how to file.

Read the announcement from the Department of Justice and details on Voluntary Disclosure.