California Restaurant Owner Charged with Obstructing the IRS, Immigration Volations, and FBAR Noncompliance

California Restaurant Owner Charged with Obstructing the IRS, Immigration Volations, and FBAR Noncompliance

According to a Department of Justice press release, Yaowapha Ritdet, 54, recently plead guilty to obstructing the Internal Revenue Service, as well as the harboring of illegal immigrants for a profit. Ritdet was the owner of Ukiah restaurants, Ruen Tong Thai Cuisine and Walter Cafe. In a federal court for the Northern District of California, Ritdet admitted that she harbored illegal immigrants to work in her and her husband’s restaurants. According to court filings, employees were instructed not to talk to anyone with regard to their wages or the working conditions inside of the restaurants. Prosecutors alleged that Ritdet failed to pay any employment taxes with regard to the illegal immigrants that she was harboring.

Ritdet and her husband Steve Walter are no strangers to the legal system. In 2013, the duo was fined $1.9 million for various labor law violations. The State of California and the US Department of Labor found that Ritdet and Walter made at least 47 employees work 12 hours or more per day, six to seven days per week. Employees were being paid less than minimum wage, did not receive state-mandated overtime compensation, and were not allowed to take breaks or lunches. Furthermore, the couple was charged in 2014 on five counts of filing false tax returns. At that time, Ritdet was also charged with two counts of failing to report a foreign bank account.

Unlike his wife, Walter has not pleaded guilty on any charges. He will stand trial in federal court in January of 2017 for filing false tax returns, harboring illegal immigrants for commercial profit, and willfully failing to comply with foreign bank account reporting laws.  Ritdet will be sentenced in federal court in February of 2017. She faces three years on the obstruction count, ten years for each count of harboring illegal aliens, and five years for failing to disclose her foreign bank account.

This story is a reminder for US residents that have foreign bank accounts that have not yet been declared to the US government that, despite the harboring of illegal immigrants having nothing to do with foreign bank accounts, any government investigation may lead to such an investigation.

The Foreign Bank Account Reporting (FBAR) laws require US residents to report the ownership or signature authority of a foreign bank account with more than a $10,000 balance at any point during a given year. Willful failure to comply can result in up to five years in prison for each year of noncompliance. Furthermore, residents who fail to declare the existence of their foreign bank account face penalties that can be as high as 50% of the high-balance of the account in the year of noncompliance.

US residents who are not in compliance with FBAR should consider participating in the Offshore Voluntary Disclosure Program (OVDP). The OVDP is an administrative program established by the IRS to help encourage residents who have not complied with FBAR laws to come forward. Under the terms of the OVDP, participants must provide a detailed disclosure of their foreign bank account and pay any back-taxes, interest, and a penalty will not be criminally prosecuted for initially failing to comply. That being said, the OVDP has some fine print. Residents may not be able to participate if they are already being investigated for another tax-related matter. The OVDP is not right for everyone and a resident who is out of FBAR compliance should meet with an experienced tax attorney to determine what the best plan of action should be.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in counseling taxpayers who are out of compliance with FBAR laws, in addition to assisting with a plethora of other tax-related issues. Going up against the IRS and trying to figure out how to solve your tax troubles on your own can result in important strategic opportunities being missed. Furthermore, an experienced criminal tax attorney will represent you in any meeting with the IRS or government agency to ensure that your rights are maintained and statements are not made to that can be used against you later. Don’t lose sleep over the possibility of prison time due to tax noncompliance. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

Also, be sure to check out our YouTube channel for valuable and informative tax videos.