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Virginia Man Faces Prison Time over Unreported Foreign Bank Accounts

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Virginia Man Faces Prison Time over Unreported Foreign Bank Accounts

According to a Department of Justice press release, a Virginia man was recently indicted on charges of failing to properly report his ownership of various foreign bank accounts, as well as filing false tax returns. Taxpayers should be reminded that failing to disclose ownership or control of foreign bank accounts on an annual basis can result in devastating consequences, including severe monetary penalties and a federal prison sentence. If you have an interest in a foreign bank account that has not been properly reported annually, it is in your best interest to contact an experienced international tax defense attorney to determine the best strategy to bring you into compliance.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore 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, KovelCPAs 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!

Defendant Had Over 20 Bank Accounts, Also Accused of Filing False Tax Returns

Court records reveal that Azizur Rahman of Herndon, Virginia had ownership and signature authority of more than 20 bank accounts in various foreign jurisdictions including Singapore, Bangladesh, the United Kingdom, and Switzerland. The Department of Justice and the IRS allege that between 2010 and 2016, Rahman failed to properly disclose the existence of such accounts to the U.S. government under the Foreign Bank Account Reporting (FBAR) regime. Additionally, prosecutors allege that during the same period, Rahman filed false tax returns, failing to disclose the foreign bank accounts, and omitting the income that they generated.

Rahman allegedly attempted to participate in the IRS Streamlined Domestic Disclosure procedures, whereby taxpayers who had non-willfully failed to comply with FBAR requirements could come forward, pay a reduced penalty, and provide comprehensive information about their previously unreported foreign bank accounts. Prosecutors allege that Rahman provided false and incomplete information about his accounts during the Streamlined Domestic Disclosure process.

If convicted, Rahman faces up to three years in federal prison for each count of filing a false tax return. Additionally, he faces up to five years in prison for willfully failing to file an FBAR. If convicted, Rahman will also likely be ordered to serve a period of supervised release and pay fines and restitution to the IRS, including a hefty willful FBAR violation penalty, discussed below.

Coming into FBAR Compliance Before It’s Too Late

For more than a decade, the U.S. government has increased its focus on bank secrecy and those Americans with foreign bank accounts. Americans have long been required to pay tax on their worldwide income and report the existence of foreign bank accounts, but only recently has the IRS and State Department worked so vigorously to enforce such laws.

The FBAR regime requires Americans to report the existence of foreign bank accounts of which they have ownership of or signature authority over if such account reaches a high balance of $10,000 in a given year. Additionally, federal law requires American taxpayers to pay tax on their worldwide income, including income stemming from foreign bank accounts, such as interest.

Americans who fail to properly report the existence of their foreign bank accounts on an annual basis face severe consequences. Following the determination that a taxpayer has willfully failed to comply with the FBAR regime, such taxpayer is subject to a penalty of up to 50 percent of the high balance of the account for each year in which the account was not properly reported. Additionally, a criminal conviction for willfully failing to file an FBAR carries a federal prison sentence of up to five years.

If you have an interest or signature authority over a foreign bank account and have not disclosed such interest under the FBAR regime, you should consider contacting an experienced tax defense attorney to discuss your options to come into compliance. With the U.S. working with foreign governments more than ever, it is only a matter of time until your foreign bank turns over your account information to U.S. authorities. At such time, options to come into FBAR compliance become much more limited.

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