The announcement was made at the 34th annual National Institute on Criminal Tax in Las Vegas on 7 December.
Getting tough
The DOJ has historically determined sentencing in US tax evasion cases based on the amount of unpaid tax.
However, DOJ tax division senior litigator counsel Mark Daly, said the department has revised this and will now determine offence levels based on the value of the undeclared offshore account.
In his announcement, Daly said the policy shift has already been applied to a case, United States v. Kim, but was not followed through because of a prior defence agreement.
In that case, the defendant had not paid $150,000 in tax, but the total value of the undeclared offshore account was $28m (£20.9m, €23.7m).
If the defendant did not already have an agreement in place, they would have potentially faced a 10-fold increase in their sentence.
Major shift
Law firm Mitchell Williams, which attended the announcement, said Daly’s comments created a fervour among the attendees.
“This is a major sentencing shift which can wildly escalate the offence level applicable to such defendants, and one which the defence bar must watch very closely. As of right now, we can only stay tuned for guidance,” the law firm said.
Mitchell Williams says another major issue with the policy shift is that allows for a two-level enhancement, where a defendant has also been convicted of an offence for filing a false or misleading Foreign Bank Account Report (FBAR).
Daly said the old policy may still apply in certain offshore tax cases, but did not elaborate further as to what these would be, saying it was “above his pay grade”, according to Mitchell Williams.
