Column: Beanie Babies creator guilty of tax fraud
Submitted by editor on Tue, 10/22/2013 - 10:12am
Ty Warner, creator of Beanie Babies, has agreed to pay a $53,000,000 penalty after being accused of federal income tax evasion for failing to report millions of income he earned in a foreign bank account.
It seems he had a secret offshore bank account at UBS starting in 1996. UBS is a Switzerland based financial services company that as part of a 2009 agreement has provided IRS with the identities of certain customers. Union Bank of Switzerland (UBS) and other overseas banks hid foreign accounts from the IRS.
Warner’s defense attorney said Warner accepts full responsibility for committing income tax evasion by failing to inform his accountants of the $3,100,000 of income he earned in 2002 in the UBS foreign bank account. It was reported he failed to pay about
$885,300 in taxes for 2002.
He can afford to pay the tax, interest and various penalties. Forbes magazine recently estimated his net worth at $2,600,000,000. That would put him at 209th of the 400 wealthiest Americans.
The Special Agent-in-Charge of the Internal Revenue Service Criminal Division in Chicago said “We encourage taxpayers to think of the serious consequences, including criminal penalties, for willfully presenting false information on the federal tax returns. All taxpayers must honor their obligation to report all of the income and pay all of the taxes they owe.”
Warner lives in suburban Chicago. He still faces the prospect of time behind bars. A conviction on a federal tax evasion charge carries a maximum five year prison sentence.
The agreement to pay a civil penalty of $53,552,248 for failure to file a Foreign Bank Account Report was announced by his attorney.
Warner is the second taxpayer to be charged in federal court in Chicago of having a UBS and other overseas bank accounts that hid foreign accounts from IRS. The U.S. Attorney’s office said “…he went to great lengths…” to hide the income from his accountants and IRS.
U.S. taxpayers are required to report all of their income, from all sources, world wide. Also there are special rules about reporting Foreign Bank Accounts.
Form 1040, Schedule B has questions about Foreign Bank Accounts at the bottom of the page that require answers. If “yes” then additional forms must be filed.
It appears Warner’s penalty is for all years, not just 2002.
Did you hear “May your troubles be less, may your blessings be more, and may nothing but happiness come through your door.”
— John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.
