Criminal FBAR Prosecutions Underscore Importance of IRS Offshore Voluntary Disclosure Program

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According to statistics compiled by Jack A. Townsend, author of the Federal Tax Crimes Blog, nearly 130 individuals have been charged with maintaining and failing to report offshore bank accounts, or enabling those who do.  Specifically, 94 taxpayers and 35 enablers have been charged with various crimes arising out of the failure to report offshore accounts, including the criminal Foreign Bank Account Report (FBAR) statute (31 U.S.C. § 5322), the tax perjury statute (I.R.C. § 7206(1)), and conspiracy (18 U.S.C § 371).

These charges have in turn led to 72 guilty pleas and 12 guilty verdicts after a trial.  Only one individual has been acquitted of the charged crimes.  Of those charged, 53 individuals have been sentenced, with 28 receiving prison time as part of their sentence.  Of those individuals receiving prison time as part of their sentence, the average period of incarceration has been over 13 months, though incarceration periods have reached as high as 10 years.

These statistics underscore the aggressiveness with which the United States is pursuing individuals who fail to properly report offshore bank accounts and offshore income.  The statistics also underscore the value of the Offshore Voluntary Disclosure Program (OVDP), which permits delinquent taxpayers to disclose their offshore financial accounts and unreported income, in exchange for a generally lower monetary penalty and a promise from the IRS to not recommend the taxpayer’s case for criminal prosecution. 

As we have previously addressed, the OVDP is not available to taxpayers whose non-compliance is discovered by the Government through the Government’s independent investigation efforts.  For that reason, and given the unrelenting efforts by the United States to root out non-compliant taxpayers with offshore assets and the potentially severe penalties they face, those considering applying to the OVDP should act sooner rather than later.

Topics:  FBAR, Fraud, IRS, OVDP, Perjury, Tax Evasion, Voluntary Disclosure

Published In: Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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