by Robert Wiener
NJJN Staff Writer

April 23, 2009

Attorney Lawrence Horn is warning fellow members of New Jersey’s Jewish community to “come in from the cold” if they are hiding undeclared income in Swiss or Israeli banks — or face the possibility of stiff penalties and even prison time.

Horn, chair of the Business Crimes and Tax Litigation Departments at Sills Cummis and Gross, told NJ Jewish News that the government is cracking down on those who have not paid United States taxes on their assets in foreign banks.

He urged those with $10,000 or more in such banks to take advantage of what the IRS calls its “voluntary disclosure policy.”

“If you come forward before Sept. 23, the Internal Revenue Service will only take 20 percent of that money. But after Sept. 23, the percentage will rise to 33, then 50 percent,” he said.

“If people don’t come forward by then, they are likely to be prosecuted.”

His plea follows a government crackdown on UBS Bank. The multinational institution has an estimated 53,000 American depositors who have not declared their earnings on their tax returns. Horn estimated that 10,000-15,000 of them are in the New York area alone, and while he cannot say what percentage of them are Jewish, he described many as “wealthy people of European extraction.”

Israel is not a repository for offshore banking in the way Switzerland or the Cayman Islands are. However, said Horn, “most Jewish people who have money in Switzerland also have money in Israel. Anecdotally, when I have clients in Credit Suisse or Deutsche Bank and they are Jewish, they usually have money in Israel, and they are not reporting that money either.”

He characterized his client base as “Americans of various descents and religions,” but noted that “a significant number are from Jewish families — whether they be European, Iranian, Iraqi, Syrian, or Egyptian — who for reasons of fleeing those countries 20 or 30 years ago placed money in accounts overseas which they either utilized on an annual basis or let sit.”

“I’m a legal oncologist,” he joked. “I give people bad news every day, because clients who are being investigated by the IRS don’t like to hear from their lawyers about what’s happening with the investigation. There are an awful lot of Jewish taxpayers who should seriously consider voluntary disclosure.”

Horn believes the federal government is offering a “very good carrot” to encourage voluntary disclosure as well as the “stick” of prosecution for tax evasion for those who don’t volunteer.

Voluntary disclosure lets depositors “avoid prosecution,” said Horn, “and they can get most of their money back without it being questioned or looked at.”

As for the stick, “if the IRS selects you to investigate, a year from now the stakes will be a lot higher,” he cautioned. “You may go to jail for 33 to 44 months if you are caught and plead guilty, and possibly longer if you go to trial and are convicted. That is a lot of time.”

Horn, who has a bachelor’s degree from Princeton and a law degree from New York University, specialized in tax fraud prosecutions as an assistant U.S. attorney for the District of New Jersey from 1971 to 1978. He is a congregant and former board member of Temple B’nai Or in Morristown and a charter member of the Lautenberg Family JCC of Morris County in Whippany.

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