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According to the Internal Revenue Service, millions of American taxpayers currently hold an ownership interest in an unreported foreign bank account. In addition to Swiss bank account holders, dual nationals, United States citizens living abroad, green card holders, and others may have an unreported foreign financial account. Since the Bank Secrecy Act was passed by Congress in 1970, American taxpayers with at least $10,000 in aggregate assets that are held offshore must file an annual report with the IRS.


In Reinhart v. Commissioner of Internal Revenue, a woman provided bookkeeping consulting services to a number of clients. In July 1993, the Internal Revenue Service (“IRS”) assessed a 1992 trust fund recovery penalty against the woman as a result of her role as a signatory on one of her client’s bank accounts. Less than two weeks later, the IRS filed a notice of lien against the woman in Volusia County, Florida.

A Laguna Beach, California physician is reportedly facing a potential prison sentence over his failure to file a Report of Foreign Bank and Financial Accounts (“FBAR”) in 2009. According to the United States Justice Department’s Tax Division, the American citizen maintained money in a Luxembourg bank account using a foreign corporate entity that was set up with the assistance of his tax preparer. Prosecutors from the U.S.

United States taxpayers who have an ownership interest in or signature authority over a foreign financial account with a balance of at least $10,000 at any time during the tax year are required to file an electronic Financial Crimes Enforcement Network (“FinCEN”) 114, Report of Foreign Bank and Financial Accounts (“FBAR”) by June 30th.

In October, a St. Louis man pleaded guilty to one count of filing a false income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (“FBAR”). The Missouri man was apparently charged with the two felonies after he was investigated by the Internal Revenue Service’s Criminal Investigation Division. According to the indictment, the man chose not to disclose the existence of bank accounts he held in Switzerland and Singapore to his tax preparer between 2006 and 2008.

In Scholz v. Commissioner of Internal Revenue, a self-employed Mississippi man filed a late federal income tax return for tax years 2007 through 2010. At the time, the man failed to pay the entire amount of tax that was listed as due on each return. After he filed the late returns, the Internal Revenue Service sent the man a Final Notice of Intent to Levy related to the unpaid taxes.

Tax filing season is once again upon United States taxpayers. Each year, American citizens and green card holders must report any income they earned in the U.S. and abroad to the Internal Revenue Service. Beginning in 2014, American taxpayers are required to include income earned by way of Bitcoin and other virtual currencies on their federal income taxes. Bitcoin is a digital or virtual form of currency that is stored on your computer and does not rely on a central bank.


In Pansier v. Commissioner of Internal Revenue, a Wisconsin man apparently failed to file his federal income tax returns for 1995 through 1998. In 2000, the Internal Revenue Service sent the man a statutory notice of deficiency and ultimately assessed taxes and penalties of more than $83,000. In late 2005, the man was charged with filing false income tax returns and other related crimes.  He later served two years in prison in connection with his crimes.

According to a recent United States Department of Justice press release, a California jury convicted two Los Angeles tax preparers of conspiring to defraud the Internal Revenue Service and willfully failing to file a Report of Foreign Bank and Financial Accounts (“FBAR”). The men will reportedly be sentenced for their crimes in March 2015.


In general, the Internal Revenue Service has up to three years from the date a tax return was due to perform an audit and 10 years to collect any taxes owed. Interestingly, filing an amended return does not alter this time limit. Despite this, a number of exceptions may extend the statute of limitations. For example, a taxpayer who failed to report at least one-quarter of his or her income may be audited for up to six years. In addition, the audit timeframe is doubled for individuals who did not report over $5,000 in income that was earned overseas.