IRS Pursues Taxpayer for Making "Quiet Disclosure", Obtains 150% Penalty From 87-Year-Old Man in Florida for Willfully Not Filing FBARs
Posted in Press Releases on June 9, 2014 | Share
Kevin E. Thorn, Managing Partner of Thorn Law Group discusses the recent penalty on an 87- year-old Florida man for not filing his FBARs on time and the effect that this 150% penalty may have on the U.S. taxpayer who still may have undisclosed offshore accounts at foreign banks.
Washington, DC (PRWEB) June 8, 2014 - On May 28, 2014, a Federal District Court Jury in Florida awarded FBAR penalties amounting to $2,241,809 to the U.S. government for a man’s failure to file an FBAR to disclose an offshore account that had a high balance of $1,691,054 during the years that the account was not in compliance with information reporting requirements. This FBAR penalty is equivalent to 150% of the highest account value in the undeclared foreign bank account of an 87-year-old man from Coral Gables, Florida. [From Miami, May 29, 2014, http://www.accountingtoday.com.]
With this latest penalty win, Kevin E. Thorn of Thorn Law Group notes, “age clearly does not matter. If someone has an undeclared overseas account at a foreign bank, the U.S. government will show no mercy.”
Thorn also observes that this case is evidence of the IRS’s intent to aggressively pursue taxpayers making “quiet disclosures” of their foreign accounts as opposed to using the IRS Offshore Voluntary Disclosure Program (“OVDP”). Thorn points out that the taxpayer voluntarily filed FBARs, albeit several years after they were due, a practice commonly referred to as a “quiet disclosure” because the forms were filed outside of the formal OVDP process. Nevertheless, the IRS still pursued this extreme penalty. By contrast, had the taxpayer been able to use the OVDP, his penalty would have been a fraction of the $2.2 million as the OVDP has a penalty cap of 20 – 27.5%, depending on when the taxpayer entered the program.
Mr. Thorn adds that, “The information that the Department of Justice (DOJ) is currently receiving from foreign banks will allow the U.S. government to identify and prosecute more American taxpayers who have not been reporting their foreign accounts.” In the wake of the Credit Suisse settlement, - in which the bank agreed to pay $2.6 Billion and pled guilty to conspiracy to one criminal charge of aiding and assisting U.S. taxpayers in filing false income tax returns, - Thorn anticipates that foreign banks will likely be giving the U.S. government account information because the banks are afraid of criminal prosecution and the hefty fines that will follow. [Credit Suisse Plea Agreement, available at http://www.justice.gov/iso/opa/resources/6862014519191516948022.pdf.]
Kevin E. Thorn, recommends that U.S. taxpayers with undisclosed overseas accounts enter into the IRS's Offshore Voluntary Disclosure program in order to avoid the high civil penalties and criminal prosecution that is occurring to American taxpayers that have not disclosed their offshore accounts. “Foreign banks are making voluntary disclosures to avoid prosecution and severe penalties, and so should U.S. taxpayers with undisclosed foreign bank accounts. Once the DOJ and the IRS obtain the identities of U.S. taxpayers with hidden foreign accounts in these overseas banks, they will not allow the account holders to enter into the IRS's Offshore Voluntary Disclosure program.” He also notes that “the IRS and the DOJ will continue to put pressure on all foreign banks in order to obtain U.S. Taxpayer information and bring those who have undisclosed offshore accounts back into compliance."
Mr. Thorn has also observed that many foreign banks are sending letters to foreign account holders informing them of the bank’s decision to participate in the offshore voluntary disclosure program and suggesting that they do the same, Thorn states that, “If your bank sends you a letter advising you to enter the IRS’s Offshore Voluntary Disclosure program, consider it a warning that they are going to turn your undisclosed account information over to the DOJ and IRS very soon.” Thorn recommends that U.S. taxpayers with undisclosed foreign accounts contact an experienced tax attorney as soon as possible in order to discuss their rights and options.
For additional information on the news that is the subject of this release, contact Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-270-7273 or visit us at https://www.thorntaxlaw.com/.
About Thorn Law Group, PLLC: Thorn Law Group, PLLC is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.
Kevin E. Thorn
Managing Partner Thorn Law Group, PLLC