Santa Clara County man pleads guilty to hiding Israeli bank account

On July 17, the U.S. Justice Department announced in a press release that Moshe Handelsman of Saratoga, California, plead guilty to tax perjury. This case is the latest in a series involving un-reported foreign bank accounts and Israeli banks under scrutiny by the Justice Department and Internal Revenue Service (IRS) for several years.

According to the press release, between 1993 and 2000 Handelsman “used three bank accounts held in the names of two different foreign corporations at foreign banks to falsely reduce his taxes. The last of those accounts was held at an Israeli bank located in Tel-Aviv, Israel. The foreign bank accounts and foreign corporations were set up with the assistance of his tax return preparers.” After closing the accounts, he transferred the $1.8 million balance to a U.S. bank and claimed that the money received was a non-taxable gift from a relative.

Handelsman, whose sentencing is scheduled for November, faces three years in prison and a $250,000 fine. In addition, he must pay a penalty to the IRS in the amount of 50 percent of the high balance of his undeclared foreign accounts. (The FBAR Penalty). However, the charging in this case is interesting. By charging tax perjury, the government’s burden of proof is lesser than if it charges tax evasion, while still retaining felony provisions and the related sentencing guidelines.

All U.S. citizens and residents who hold funds in foreign bank accounts excess of $10,000 must disclose this information on their individual income tax returns. If you hold assets in a foreign account, you should seek advice from an experienced tax attorney.