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BOSTON: An Indian-American businessman was today indicted on charges of conspiring to evade taxes in the US by hiding offshore bank accounts in India.

The indictment said Vaibhav Dahake of New Jersey, maintained undeclared bank accounts in the British Virgin Islands and India from 2001 through 2010 and failed to report these to US Internal Revenue Service (IRS) on his federal income tax returns, it said.

Employees of an England-based bank helped Vaibhav hide his undeclared funds.

While the indictment, returned in a New Jersey federal court, did not identify the bank by name, it said it "was one of the largest international banks in the world and was headquartered in England."

According to a Wall Street Journal report, a person familiar with the case said the bank was HSBC Holdings PLC.

Dahake, a principal of an IT business, was born in India and became a naturalised US citizen in 2006.

"Those who attempt to hide their assets and income in offshore accounts, and those who aid them in doing so, by now should realise that no bank offering such services will be a safe haven from the IRS ," US Acting Assistant Attorney General John DiCicco said in a statement.

Dahake's Indian accounts were maintained by the England-based bank.

According to the indictment, the bank operated a US division called NRI Services, which marketed offshore banking services to US citizens of Indian descent.

Through the NRI service, the bank "encouraged US citizens to open undeclared bank accounts in India," the indictment said.

In 2001, Dahake received an unsolicited letter from the bank advertising bank accounts in India that paid high interest rates.

Dahake later met with a banker, employed by the bank's New York office, who told him the advantages of opening a bank account in India were that no US forms were required, he did not have to provide a social security number and the account was not taxable in India.

One banker also allegedly told Dahake to deposit funds into the accounts in small amounts to "stay below the radar" since any transfers of more than USD 10000 is required to be reported to American customs officials.

The indictment has also cited as unindicted co-conspirators five unidentified bankers: three Americans and two Indians in Mumbai.

Commenting on the report, an HSBC spokeswoman Juanita Gutierrez said, "HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes by US taxpayers."

Dahake's lawyer Lawrence Horn said the indictment was "most regrettable".

He added that "the timing of this indictment appears to be a clubbed invitation for American citizens with undisclosed accounts to apply for admission into the second initiative of the voluntary disclosure programme or risk prosecution once that bank eventually discloses his or her name to the IRS"

The count with which Dahake is charged carries a maximum potential penalty of five years in prison and a USD 250,000 fine.

source: http://economictimes.indiatimes.com/news/news-by-industry/et-cetera/indian-businessman-indicted-for-tax-evasion-in-us/articleshow/7370546.cms

Don't forget to declare NRE interest in US 1040 and file FBAR form (TD 90-22.1) with Dept. of Treasury. IRS is getting strict. See bellow.
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IRS Targets 9,000 Taxpayers With Offshore Accounts Linked To India

http://blogs.forbes.com/williampbarrett/2011/04/07/irs-targets-9000-taxpayers-with-offshore-accounts-linked-to-india/

Dramatically expanding its efforts to unearth unreported offshore income, federal authorities Thursday asked a court for permission to force HSBC India to cough up the names of 9,000 U.S. taxpayers of Indian descent.

The U.S. Department of Justice, which represents the Internal Revenue Service, filled a lawsuit in San Francisco federal court to allow the serving of a so-called ?John Doe? summons on HSBC India.

HSBC India is a unit of London-based HSBC Holdings, an international banking giant on the Forbes 2000. HSBC operates 470 branches in the U.S. through HSBC Bank USA. Until last year, HSBC India operated ?representative offices? in Fremont, Calif., a San Francisco suburb, and New York City catering to what was called the ?non-resident Indian? market, or Indians living outside India.

US taxman gets after Indian-Americans


http://timesofindia.indiatimes.com/nri/news/US-taxman-gets-after-Indian-Americans/articleshow/7915510.cms

Do we have to report income earned in indian saving account (which is not a NRE/NRO account) to US authorities?

roz;381672Do we have to report income earned in indian saving account (which is not a NRE/NRO account) to US authorities?

As per law, YES ( if your are USC, green card holder or someone who is considered US resident for tax purposes).

samv;381673As per law, YES ( if your are USC, green card holder or someone who is considered US resident for tax purposes).

Unless one is on a short term business-visa, they will be a resident. Even if there is no 1099-int the individual is responsible to report this income. As far as I know, its not just savings, if one has signing authority on any account, it needs to be reported.