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Government pursuing offshore accounts for tax evasion

A billionaire's wife in Russia has accused her estranged husband of hiding significant assets to keep them from her through their divorce process. The two have battled over the accusations in at least seven countries concerning a portion of the man's $9.5 billion estate beginning in 2008 when the wife filed the divorce complaint. This situation has larger implications due to the use of offshore accounts and the government's mission to pursue individuals in Boston and other areas who are using these types of accounts to commit tax evasion.

The billionaire's wife in this case is accusing her husband of using offshore holding companies and trusts to hide the couple's assets. She claims that he has stashed away approximately $500 million of art, a yacht valued at $80 million and jewelry worth approximately $36 million. She has pursued her case in a variety of courts, including one in the United States to go after approximately $6 billion that she believes is owed to her. Her case represents the significant value of assets that some people attempt to hide through the use of offshore accounts.

The Tax Justice Network reports that individuals hid up to $32 trillion in offshore accounts as of December 31, 2010. Researchers report that some individuals use the accounts to avoid paying taxes while others use the accounts to keep their assets private. Using offshore accounts is a somewhat common practice for the wealthy as 30 percent of the 200 richest people in the world use some form of an offshore holding company or a domestic entity that indirectly holds the assets. Sometimes, these accounts can provide tax shelters for wealthy individuals. However, developments in the law are requiring these wealthy individuals to make their assets more transparent. For example, some countries' banks release details about the owners of their accounts when requested.

Individuals who have significant assets to protect may consult a Boston tax attorney. An attorney may be able to advise clients about methods to protect their assets that will not implicate them for any criminal violations.

Source: Bloomberg Businessweek, "Billionaires Flee Havens as Trillions Pursued Offshore," David de Jong and Robert LaFranco, April 29, 2013

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