Accountant Faces Five Years in Prison for Failing to Timely File the FBAR
A certified fraud examiner and forensic accountant has reportedly pleaded guilty to willfully hiding almost $1 million from the Internal Revenue Service in a Swiss bank account. In USA v. Bloomberg, a 55-year-old Atlanta man was accused of failing to report his ownership and control interest in a foreign bank account between 1997 and 2008. According to the United States Justice Department, the Georgia man failed to report an account that was held at UBS AG, one of the largest banks in Switzerland. The man now faces up to five years in prison and a civil fine of one-quarter of a million dollars. He is currently scheduled for sentencing in mid-December.
In the United States, taxpayers who hold an overseas financial account with a balance that exceeds $10,000 must file a Report of Foreign Bank and Financial Accounts (FBAR) in addition to their income tax returns each year. Individuals who fail to comply with FBAR reporting requirements face hefty financial penalties and potential criminal prosecution. The $10,000 threshold applies to the aggregate account value of any foreign asset that is held by an American taxpayer. In addition, the threshold relates to the maximum value of each overseas account or foreign asset a person holds throughout the calendar year. Because of this, the reporting obligation may be triggered even if none of a U.S. taxpayer’s individual offshore accounts has a balance that exceeds $10,000 or more during the tax year.
A foreign financial asset that is subject to FBAR reporting requirements includes a savings, checking, or secured credit card account. Foreign securities, insurance policies that may be cashed out, and mutual funds must be reported to the United States Treasury using the FBAR. In general, the financial penalty for an individual’s failure to timely file the FBAR may reach one-half of the total foreign account balance. In limited circumstances, an American taxpayer who can demonstrate that his or her failure to file the FBAR was not willful may incur a reduced financial penalty.
As this case demonstrates, U.S. taxpayers who fail to disclose an ownership or control interest in a foreign financial account may face strict financial and other penalties. If you would like more information regarding your international income tax obligations, tax attorney William Hartsock may be able to assist you. Mr. Hartsock is a certified tax law specialist with more than 30 years of experience advising clients in Southern California about international tax law matters. To discuss your situation with a knowledgeable tax attorney, do not hesitate to call Mr. Hartsock at (858) 481-4844 or contact him through his website.
Guilty: Atlanta account hid money in Swiss bank account, Atlanta Business Chronicle
USA v. Bloomberg, No. 1:14-cr-00231, United States District Court for the Northern District of Georgia
Photo Credit: Xandert, MorgueFile