The U.S. Internal Revenue Service, the tax-collecting agency, is deep into a probe of U.S. citizens who are trying to evade taxes by means of real estate investments and bank accounts here.
The probe centers on James Stanley Gray and his wife, Karen Amerling-Gray. Gray is the owner of the Hotel Cocal and Casino in Jacó and is involved in other real estate developments, and his wife is assistant manager of the hotel, according to a complaint and affidavit filed by an IRS agent in U.S. District Court for the Eastern District of Michigan where the Grays live.
The affidavit by an IRS special agent, Casey Carnahan, details an encounter with Gray with an undercover investigator and a telephone conversation with another undercover investigator with one of Gray’s associates in Costa Rica. The IRS agent also received copies of emails that Gray sent to a U.S. investor in which he said he does not report capital gains taxes on his Costa Rican condominium activities, according to the affidavit.
But it is the telephone call that probably is of the most interest to local investors. The affidavit said that a Gray associate, Brad Sanson, outlined the way developers of Vista Las Palmas and Vista Mar have established Costa Rican limited liability companies for clients who invested in the condominium units, said the affidavit. The associate also said that clients are directed to banks in other countries to establish accounts, it added. The document said that from 80 to 85 percent of the approximately 80 investors were U.S. citizens.
The affidavit also said that Gray’s associate said that clients are instructed not to admit to owning foreign property on their annual tax return and that payments for properties can be disguised as payments for loans or other expenses.
The second undercover agent in a personal meeting with Gray in Michigan said that the hotel owner outlined how to conceal income from rentals and the sale of condo units.
The undercover agent quoted Gray as sayings he has evaded U.S. taxes this way for 18 years, said the affidavit.
The complain lists many bank transactions attributed to accounts held by Gray and his wife. Some accounts are in Banco Nacional here. At one point the affidavit notes that the transactions are typical of a hotel and casino operations.
June 19 agents executed a search warrant at the Gray home in Flushing, Michigan, and obtained many documents to use as evidence. The documents appear to substantially outline the business operation by the Grays, including many bank account statements and notations of individual deposits and withdrawals.
According to the complain, Gray and his wife are each facing a charge of failing to report that they had a financial interest and a signature authority over a financial account valued over $10,000 in a foreign country.
Gray also is facing a federal charge of possessing firearms as a convicted felon. The affidavit said that Gray had been convicted in 1986 of possession of cocaine with intent to distribute. The affidavit says that Gray had a Michigan hunting licenses for 11 years. The search turned up firearms typical of those used by hunters.
U.S. tax laws require citizens and residents to file a report every year if they have signature authority over a financial account located outside the United States and if the value of the account is more than $10,000 at any time during the calendar year. This is the controversial FBAR law,
“The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law,” says the IRS on its Web site. “Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.”
The United States is one of the few countries that taxes its citizens on money they earn or receive overseas. Although there is a $92,900 exemption for earned income, Uncle Sam still wants taxes for overseas capital gains. Costa Rica does not tax capital gains, so the situation becomes complex when a U.S. citizen owns a Costa Rican company that makes money on a real estate transaction.
In January the IRS opened a voluntary disclosure program to let taxpayers make filings that they may have overlooked or ignored.