The Government Continues Its Fight Against Undeclared Foreign Bank & Financial Accounts

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The Government Continues Its Fight Against Undeclared Foreign Bank & Financial Accounts

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Although it is not illegal to utilize a foreign bank account, the federal government’s attitude toward Americans who have them can be best described as untrusting. Federal law requires the reporting of foreign bank accounts on an annual basis, regardless of whether the account is earning significant amounts of interest or investment income. Recently, the federal government’s efforts to enforce such reporting laws have dramatically increased, prompting new enforcement legislation to be passed and the creation of programs for noncompliant Americans to come forward and get current on their filings. If you have a foreign bank / financial account with a balance of $10,000 or more that has not been reported, you should consult with an experienced FBAR defense attorney to determine your potential exposure and options to get back into compliance.

Fifth Circuit Rules Against Law Firm’s Challenge to John Doe Summons

According to a Department of Justice press release, the Fifth Circuit Court of Appeals sided with a lower District Court that ruled in favor of the IRS and its enforcement of a “John Doe” summons against a law firm. After learning that the Taylor Lohmeyer Law Firm PLLC may have helped clients set up foreign bank accounts, the IRS issued a summons to the law firm, ordering it to provide identifying information of clients that it may have provided foreign bank account services to. A “John Doe” summons is a summons that does not name an individual or set of individuals, but rather identifies certain criteria and seeks to obtain the names of those involved in a certain activity.

The law firm challenged the summons on the grounds that it would violate the attorney-client privilege. The Fifth Circuit Court of Appeals ruled that complying with the summons and providing the names of clients that used the law firm’s services will not constitute a violation of the attorney-client privilege because the revelation of the identity of clients who participated in certain types of transactions would not, by itself, reveal any confidential communication between an attorney and their client.

Americans’ Bank Account Reporting Requirements 

Under the Foreign Bank Account Reporting (FBAR) laws, Americans with an account from a foreign financial institution with a high-balance of more than $10,000 USD at any point during a given year are required to disclose the existence of such account on an annual basis. Those who willfully fail to complete their FBAR disclosures face penalties up to 50% of the high-balance of the account for each year of noncompliance and can even face time in federal prison.

Government Enforcement Actions and Taxpayer Programs to Come into Compliance

Over the past decade, the government has taken several steps to force Americans into FBAR compliance. From the passing of FATCA legislation, which forces foreign banks to hand over identifying information about American account holders, to deferred prosecution agreements with Swiss banks, aimed at establishing a stream of information that can identify Americans with Swiss bank accounts, the federal government has made it known that they have put their foot down.

For those Americans who are out of FBAR compliance, the government has established, albeit limited, programs to help individuals come back into compliance. From certain voluntary disclosure programs to streamlined filing procedures, there are still avenues to mitigate some of the negative consequences that could be associated with being caught without filing an FBAR.

Seeking the Help of a Tax Attorney 

At the end of the day, understanding the FBAR requirements, the potential consequences, and the procedures whereby you can come into compliance can be complex. An experienced FBAR defense attorney can help you by gaining an appreciation for your particular situation and working with you to determine your best course of action to navigate the road of coming back into compliance.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle-market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.

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Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including non-reported foreign taxable income and non-filed foreign information returns including FBARS self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation/prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process.  Only an Attorney has the Attorney-Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth.   See our Testimonials to see what our clients have to say about us!

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Regardless of your business needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

In addition to our main office in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

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