Our colleague Jack Townsend has compiled some interesting statistics on criminal FBAR prosecutions. (Jack’s Federal Tax Crimes blog appears on our blog roll.) As we have previously reported, approximately 130 people have been charged with failing to report offshore bank accounts, failing to file FBARs or aiding and abetting those that have failed to report. The latter category of aiders and abetters are the bankers and sometimes lawyers and accountants involved in setting up the unreported accounts.
According to Jack, to date 72 of those charged have pleaded guilty. 12 were convicted at trial. Most of the others are still awaiting trial. Only 1 person has been acquitted.
Of those that were convicted, 53 have been sentenced. Slightly more than half received prison time (28 individuals).
Of those going to jail, the average sentence was 13 months. At least one person, however, received 10 years.
The sentencing statistics are a bit misleading in that some of the “aiders and abetters” received reduced sentences in return for turning over their client lists. The Justice Department has successfully “persuaded” many bankers to cooperate by turning over their list of American account holders and to testify as necessary. In return, the government permits a downward departure from the federal sentencing guidelines. The net result is that those bankers and lawyers that cooperate can frequently avoid prison.
These statistics highlight just how serious the government has become about unreported foreign bank accounts and other foreign assets. Although the statistical odds of going to prison for an unfiled FBAR remain low, the civil penalties remain a vey real threat to many.
Failure to file an FBAR – Report of Foreign Bank and Financial Accounts – is a felony. Whether or not you are prosecuted, if the government decides your failure to file was willful, you can expect civil penalties up to the greater of $100,000 per account or 50% of the highest account balance. These civil penalties can be imposed for each year the account was not reported.
It is possible to avoid the risk of a criminal FBAR prosecution and the punitive civil penalties. Time is running out, however. The IRS operates it foreign reporting system on a “first contact” basis. If they find you first or obtain your name from a cooperating bank or banker, all bets are off and you can expect an audit and a fight. There are some amnesty options but only for taxpayers who come forward before they are caught or identified.
If you have an unreported foreign account or have failed to file one or more years of FBARs, contact an experienced FBAR lawyer immediately. The rules are simply too complex and the risks are too high to navigate these waters alone.
Our experienced team of IRS tax lawyers know how to work quickly and fully protect your rights. For more information on FBARs, FATCA and offshore tax reporting, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. The author of this post, attorney Brian Mahany, can also be contacted at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in complete confidence.
Post by Brian Mahany, Esq.
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