Last week, Michele Bergantino, an Italian citizen and Swiss Resident, was sentenced to two years of unsupervised probation for his role in providing Swiss banking services to Americans with the intent to defraud the United States.
Last year, Bergantino pleaded guilty to one count of conspiring to defraud the United States. A wanted fugitive since his indictment in 2011, Bergantino served as a banker at the U.S. tax desk of Credit Suisse AG. During his time at the bank, prosecutors alleged that Bergantino assisted U.S. residents in setting up and maintaining foreign bank accounts with the aim of evading federal income taxes.
Foreign Bank Account Reporting (FBAR) laws require that Americans with foreign bank accounts disclose the existence of such accounts on an annual basis if the high-balance of such account exceeds $10,000. Those who are determined to have willfully failed to comply with FBAR may be sentenced to time in federal prison. Additionally, willful non-filers may face a penalty of up to 50% of the high balance in the undeclared bank account for each year that the account went undisclosed.
Those, like Bergantino, who are found guilty of conspiring to defraud the United States, are subject to the sentencing guidelines that are referenced to determine the appropriate sentence. In Bergantino’s case, federal guidelines indicated that the appropriate sentence should have been at least 37 months in prison. But at the sentencing hearing, the prosecution recommended only 22 months. The court determined that Bergantino should not serve any time in prison, at all. Instead, Bergantino was sentenced to two years of unsupervised probation, potentially evidencing preferential treatment for those who are willing to provide information to secure convictions of Americans who have failed to declare their foreign bank accounts.
The Offshore Voluntary Disclosure Program (OVDP) provides residents that have not filed the proper disclosure forms with the IRS with a way to avoid a criminal prosecution. In order to qualify for a deferred prosecution agreement, the applicant must provide the government with extensive information about the foreign bank account. Additionally, the applicant must pay back-taxes and interest associated with income generated from money in the undeclared foreign bank account. Lastly, the applicant must pay a penalty, albeit less than the penalty for willful non-filers.
The OVDP has a potential drawback for residents who have or have had accounts at foreign institutions that are currently cooperating with the United States. OVDP acceptance may not be available for those applicants who are currently being investigated for any tax-related reason. Since the passage of the Foreign Account Tax Compliance Act (FATCA), banks from around the world are lining up to transmit information about American-owned bank accounts to the IRS. Thus, it is only a matter of time until incriminating information is transferred right into the hands of the IRS and their Criminal Investigations Division. Furthermore, bankers like Michele
Bergantino know that providing damning information about customers from the U.S. means lesser prison sentences.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing U.S. residents with ownership interests in foreign bank accounts. Regardless of your reasoning for failing to disclose your account to the IRS, our team of zealous advocates are ready to develop a plan to mitigate the potentially devastating impact of an FBAR prosecution. Do not lose another night of sleep over an undeclared foreign bank account. Contact the Tax Law Offices of David W. Klasing for a reduced-rate consultation.
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