I have to think most people at least know what a "Beanie Baby" is, and some of you may still have them in your homes (someday they will be collector items, right?). This morning, Ty Warner, the creator of Beanie Babies, was charged with tax evasion in U.S. District Court in the Norther District of Illinois. Warner is a resident of the Chicago area and is the sole owner of TY, Inc., most known for designing and selling the toy animals known as Beanie Babies. Warner allegedly failed to report income earned from an offshore account starting in the mid-1990s. One of those accounts was with UBS (Union Bank of Switzerland) who has admitted to the IRS it helped taxpayers hide accounts.

Warner has agreed to pay a more than $53 million penalty, and according to an NBC News article, his attorney has authorized the government to state Warner is cooperating with the IRS to resolve the situation and he will plead guilty. In addition to the $53 million penalty, it is possible he will be found liable for back taxes including interest and penalties. Criminal penalties include up to 5 years in federal prison and a $250,000 fine. A Department of Justice news release details the possible penalties.

U.S. taxpayers must pay taxes on all income earned worldwide, and must report certain foreign financial accounts. (See this post from January 2012 describing some of the foreign reporting requirements.) Various "celebrity" tax fraud or tax evasion cases have been making the headlines recently. Gary Shapiro, the U.S. Attorney for the Northern District of Illinois stated "everyone must pay taxes on all of their income, not just the amount they choose to report."

As the DOJ continues to investigate U.S. taxpayer clients of UBS, I would imagine we will continue to hear of similar cases with similar charges.