Tax Machine Blog™

Beanie Baby Maker Faces Five Years for Tax Evasion

Swiss Bank Accounts lead to Ty Warner’s claim that he will plead guilty and shocking $53 Million Penalty for Failure to file an FBAR.

Still rocking their tags likes its 1996

Still rocking their tags likes its 1996

 

It turns out that while I was busy buying happy meals at McDonalds because I thought the beanie babies that came with them were a good investment (no need to buy a book to know that they weren’t), H. Ty Warner was busy building up his own stash – of cash – and squirreling it away in a Swiss bank account.

According to the charging documents, Warner opened his account in 1996. In 2002, when his investment account was worth around $93.6M, Warner earned $3.1M in gross income through the account’s investments. He did not tell his accountant about the investment, and it was not reported on his income tax return that year as a result.

In addition to the civil penalty of $53M, Warner could face up to five years in jail for tax evasion if he pleads guilty.

The toughest part here for Warner must be that he had tried to enroll in the IRS’s Offshore Voluntary Disclosure Program in 2009. He tried to come clean.  But something must have gone wrong with his application, because Warner clearly did not get accepted into the program.

Warner was charged when 100 Swiss banks decided less than a month ago to hand over the names of their customers in order to avoid billions of dollars in fines.

As more and more of these banks begin to hand over customer data, more and more people will end up being charged. Once this data is handed over by a bank, its customers no longer are eligible for the OVDI program.  It’s not clear what disqualified Warner from the program, but it is pretty clear cut that once a customer list is disclosed to the IRS, those customers are no longer eligible.  Time is running out. It’s time for taxpayers with offshore accounts to act, and get accepted into the OVDI program before it is too late.