After months of highly-publicized courtroom drama, former Trump campaign chairman Paul Manafort was convicted in August of 2018 in Virginia federal court on eight counts of various tax and financial crimes, including bank fraud and tax fraud involving failures to disclose offshore financial accounts. The following month in Washington D.C., Manafort entered a plea deal with federal prosecutors admitting to two additional counts of witness tampering and conspiracy to defraud the United States. He now faces what could, at age 69, amount to a life sentence at the recommendation of special counsel Robert Mueller, who prosecuted Manafort after being appointed to investigate Russian interference with the 2016 presidential election. Mueller’s legal team has requested a sentencing range of 19 to 24 years in prison for Manafort, reminding taxpayers that, while this particular case is in many ways exceptional, extremely harsh penalties can result from the willful failure to report foreign income and willful non-filing of financial accounts & other required offshore information returns (Forms like 8938, 5471, 5472, etc.…)
Paul Manafort has been a subject of legal controversy since July 2017, when special counsel Robert Mueller authorized FBI agents to raid the former campaign chairman’s Virginia home in search of documents related to Russian election interference. In October 2017, just months after the FBI raid, Manafort – along with political consultant Rick Gates, who later pleaded guilty in February 2018 – was indicted on 12 criminal counts, including money laundering and conspiracy against the United States. In February 2018, prosecutors filed a new 32-count indictment charging Manafort with failure to file FBARs, subscribing false tax returns, and other federal financial crimes. Yet another indictment was filed in June 2018, this time charging Manafort (and co-defendant Konstantin Kilimnik) with obstructing justice and conspiracy to obstruct justice.
While jurors were unable to reach a unanimous verdict on many of these charges, Manafort was ultimately convicted on eight counts, later pleading guilty to two additional offenses. As of February 2019, crimes Manafort has either pleaded guilty to, or been found guilty of, include one count of failing to file Reports of Foreign Bank and Financial Accounts (FBAR), two counts of bank fraud, two counts of conspiracy, and five counts of tax fraud.
Mueller’s legal team has argued against lenient sentencing, instead recommending that U.S. District Judge T.S. Ellis impose a sentence of 19 to 24 years in federal prison for the eight counts. At the age of 69, these penalties would likely spell life in prison for Manafort. A sentencing date in the Virginia case will be set – and a sentence imposed – after the former campaign chairman is sentenced in March 2019 in the D.C. case. Explaining the request for harsh penalties, Mueller’s legal team wrote that Manafort made “criminal decisions that were not momentary or limited in time. They were routine.”
To provide some background concerning these charges, the FBAR (Foreign Bank Account Report), or FinCEN Form 114, is a tax form that must be filed to report foreign income exceeding a federal threshold of $10,000. For example, a U.S. resident or dual citizen who maintains a savings account in his or her country of origin might be required to file an FBAR, depending on the value of his or her offshore assets. As our FBAR tax lawyers have cautioned, Manafort’s tax fraud charges should warn taxpayers to file an FBAR before it’s too late. Per current FBAR penalties, even accidental noncompliance can lead to fines of up to $10,000 per violation, plus related fees and expenses.
The crime of “subscribing to false United States individual income tax returns,” charged in the 32-count indictment, involves filing a tax return despite believing it to contain significant misstatements, such as false information about the filer’s taxable income. Taxpayers should be warned that this offense alone – even without any additional charges – is capable of resulting in a three-year prison sentence and a fine of up to $100,000, penalties our IRS tax fraud attorneys discuss in greater detail here.
Failure to report offshore accounts, income generating assets or U.S. income to the IRS can lead to felony criminal tax and willful offshore information noncompliance criminal charges. Even in a scenario where the taxpayer made an honest filing mistake, hefty fines can still be imposed. Working with a highly experienced international tax attorney or CPA gives you the best odds of coming back into compliance with as few negative ramifications as possible – and emerging from an IRS audit, such as a foreign account tax audit, with the lightest penalties possible. Strategic legal representation is especially critical if an IRS criminal investigation is already underway, since it is urgent to protect the taxpayer from self-incrimination immediately.
We have extensive experience with the following methods of coming back into offshore income and information reporting requirements. All of them require you to reach out to the taxing authorities before they approach you regarding your domestic or offshore noncompliance.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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