[authors: Sherwin P. Simmons, II
, Jonathan E. Gopman
, Barbara E. Ruiz-Gonzalez
, and Leanne Reagan
A former bank client of global financial services provider, UBS, AG, was sentenced to four months in federal prison for willfully failing to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"), for the account the man held with as much as $4,000,0000 in it. This information was released by the U.S. Attorney for the Southern District of Florida on July 25, 2012.
The former bank client, from Miami Beach, Florida, paid a civil penalty of $2,000,000 related to the $4,000,000 high account balance stemming from tax year 2006. Additionally, the client was sentenced to four months in federal prison, three years of supervised release, 250 hours of community service, and a $20,000 criminal fine.
The bank account related to two offshore corporations owned by the man, one in the Virgin Islands and one in the Republic of Panama. These corporations opened the accounts. The man was not named as the direct owner but instead he was deemed only the "beneficial owner." The accounts were opened from tax years 2005 through 2007.
It is stated that the man was aware of the obligation on the FBAR to report as he had previously filed FBARs for other offshore corporations. An FBAR is required to be filed by both U.S. citizens and residents who have a financial interest in or signatory authority over a non-U.S. financial account with a value of more than $10,000 at any point during the tax year. The $10,000 amount is an aggregation of all non-U.S. financial accounts and not just an analysis on an account by account basis. See our Practice Update
The information on the former bank client was turned over after the bank agreed in February 2009, to pay $780,000,000 under a deferred prosecution agreement to settle the claim that the bank conspired to defraud the U.S. by impeding the Internal Revenue Service ("IRS"). The bank also agreed to turn over information to the U.S. Department of Justice on 300 account holders. See our Practice Update
A U.S. citizen or resident that held an account with UBS or any other institution that has not filed the necessary FBARs for the last eight tax years, should immediately reach out to legal counsel to discuss any potential issues they may have and their alternatives.