Non Expat Beanie Babies Creator Admits Tax Evasion

25 Sep

Will pay $53 mn penalty for FBAR failure

By David Voreacos and Andrew Harris (Bloomberg) as published online in Accountingtoday.com and is here ammended by IRS vs EXPATS
We must preface this post with the statement that this tax evader is NOT an expat. He is an American Person who lives in the United States of America and hid his millions in an offshore bank in Switzerland. I am an EXPAT who lives in Israel. My bank may be considered “offshore” by the IRS, but for me it is “ONSHORE.” My bank is around the corner from where I live and is used by me to deposit my local income and to pay people day to day with the bank credit card and checks. The Justice Department, in its public announcements such as this one, should accentuate that the guilty parties are not expats.

(Bloomberg) H. Ty Warner, the creator of Beanie Babies plush toys, was charged with tax evasion for failing to report $3.2 million in income on a secret Swiss bank account that held as much as $93.6 million in assets, and will pay over $50 million in penalties for failing to file an FBAR.

Warner, 69, will plead guilty in federal court in Chicago for hiding income at UBS AG, the largest Swiss bankd, U.S. Attorney Gary Shapiro said in a statement. Warner falsely reported his 2002 income as $49.1 million, omitting money he made on his UBS account. He amended his 2002 return in 2007, yet understated his tax by $885,300, according to court papers.

Since 2009, the U.S. has prosecuted about 70 U.S. taxpayers and 30 bankers, lawyers and advisers in a crackdown on offshore tax evasion.  Warner, the sole owner of TY Inc., held the highest account balance of the taxpayers prosecuted in the crackdown.

 “This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now,” Gregory Scandaglia, Warner’s attorney, said in a statement. “Mr. Warner accepts full responsibility for his actions with this plea agreement.”

Warner, of Oak Brook, Illinois, also will pay a civil penalty of $53.6 million for failing to file a required Report of Foreign Bank and Financial Accounts, or FBAR, according to Scandaglia. He is scheduled to appear in court for his plea on Octocber 2, according to Shapiro’s spokesman Randall Samborn.

Warner opened a secret account at UBS in 1996. From there, he transferred $93.6 million in December 2002 to another secret Swiss account at Zurcher Kantonalbank, according to his criminal charging document known as an information.He disguised his ownership of the ZKB account by holding it under an entity called the Molani Foundation, court papers show. In 2002, he failed to report his UBS income of $3.2 million to his outside accountants, and didn’t file an FBAR. The tax return he filed for 2002 also was false, according to the information.

In 2009, Warner tried to avoid prosecution through an amnesty program at the Internal Revenue Service known as the Offshore Voluntary Disclosure Program, according to Scandaglia. He was denied entry, the lawyer said.

As an added note, the Beanie Babie Billionaire is to be sentenced on January 14, 2014. Apparently he has requested a judge to give him probation, not prison, for evading taxes. You can read about it in Accounting Today for the Web.

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