Not everyone in Miami is on the up & up. Sure, your neighbor could have bought that brand-new Mercedes-Benz with the Christmas bonus. Or it could have been that narco slush fund in the Cayman Islands. The truth is that the Magic City is awash in foreign funds -- much of it under the IRS radar.
Those days may now be numbered. Miamians with overseas accounts over $10,000 have roughly one month to reveal them under the Offshore Voluntary Disclosure Initiative (OVDI). The Department of Justice is getting ready to punish those who don't.
"I find this initiative sinister," says tax attorney Nigel Grant from the law firm of Aramis Hernandez. "There are so many Indians circling the wagons but nobody is talking about it."
But it's not just tax-evading drug lords and money launderers who will get caught in the government's "draconian net," warns Grant.
Any U.S. resident who has more than ten grand in an overseas account could face stiff penalties -- even jail time -- if he or she doesn't declare the funds to the IRS. In Miami, where a full 60 percent of the population is foreign-born, that's a hell of a lot of people that could be under scrutiny by the Feds.
"A lot of people fall into this net without even realizing that they do," Grant says. "Venezuelans, Brazilians only plan to be here for three or four years, but quite possibly stay longer. That can make them US-based persons in the eyes of the IRS. And if they still have accounts back home, they could be in trouble."
Under OVDI, tax evaders can pay back-taxes without facing jail time or huge penalties. But unlike a similar program in 2009, this time the Feds haven't really advertised the initiative, leading Grant to believe that the Obama administration will make an example of some tax cheats in time for the 2012 election.
"We've seen the IRS beefing up its criminal investigation," Grant says. "Frankly, the potential for prison is high, but there's not much publicity this time around."
Like Miami's modern-day Cassandra, Grant sees a tax showdown looming on the horizon -- but few are heading his warnings ahead of OVDI's end on Aug. 31.
"Miami is hot bed of money laundering and tax evasion, a lot of it drug related," admits the tax attorney. "At the same time, there are more FBI agents in Miami than any other city."
Something has got to give.
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