Sentencing Guidelines for Taxpayers Convicted of FBAR Violations
Provided by HG.org
Having foreign assets or income could lead to severe consequences when the individual does not disclose these details to the Internal Revenue Service. A Report of Foreign Bank and Financial Accounts, or FBAR, is necessary when these items exist, and keeping the details secret or concealed from the government may lead to severe sentencing when convicted.
Those with foreign bank accounts, holdings and assets need to report and disclose this information to the IRS or suffer penalties for nonpayment on income. Anything over $10,000 in value needs placement on the forms provided by the agency. This is for all United States citizens, residents and business entities residing in the country. Without maintaining financial records or keeping FBAR paperwork filed appropriately, the company or person may face violations that sentence the entity or person to severe punishments. When the individual or business is willfully deceiving the IRS, these penalties are often more serious.
Failure to File Sentencing
Since 2017, a failure to file could lead to severe sentencing depending on how much the person or business has within offshore accounts or in foreign financial institutions. The failure to disclose the information is often a willful act that the person knows he or she is doing and attempt to deceive the IRS. As long as the accounts hold more than the $10,000 threshold, the FBAR paperwork needs filing. The government agency may ensure the person faces criminal charges, and if the account holds millions, penalties may exceed the million-dollar mark. This could lead to both criminal and civil charges filed by the IRS. The flat fine of $100,000 is often the maximum civil penalty for FBAR violations that are willful, but this could constitute as much as half of the amount in the account discovered.
Sentencing Vague Guidelines
With the usual $100,000 maximum, the 50 percent seizing of the assets in a foreign account appears to have severe consequences for those failing to file an FBAR with the IRS. Additionally, the person may face criminal charges in up to five years behind bars. This could calculate to millions in damages owed to the agency, but the person may also lose any access to the account while in prison or jail. Changes to guidelines alter often, and some are minor. Others that are serious could lead to severe ramifications to those violating the taxation rules. Sentencing modifications occur when the government alters the position on what sentencing should apply based on the circumstances.
There are multiple possibilities depending on the violations. If the person failed to file multiple FBARs, an income tax return and other forms necessary to disclose income or business sales, he or she may face both devastating fines through civil charges and criminal time behind bars. Even when pleading guilty, the government may not reduce the sentencing below the guidelines. Additionally, the more money hidden from the IRS, the greater the Base Offense Level, and this will increase the fines and penalties. It is crucial to hire a lawyer to defend against the charges. However, cooperation through each step may provide an opportunity to face less serious sentencing.
To determine how much more than the base level of sentencing happens, there are special offense characteristics that may apply. If the person affected knew of illegal activity or was intending to commit illegal acts, he or she may face worse sentencing. The same is possible when the offense dealt with smuggling or bulk cash deals. The base level in the offense may find a reduction in sentencing as well. If the defendant did not act in a reckless manner with the funds, or if the funds were due to lawful actions or used for these lawful purposes, it could decrease the base offense for sentencing means.
The level of sentencing may increase by two if there is a pattern of illegal activity that involves more than $100,000 in a year. This could include more than one FBAR filed falsely, incorrect tax returns with false income statements, a 1040 form or similar issues in a single year period. When the activity occurs in a year, it shows a pattern of behavior.
Legal Support for FBAR Violations
It is important to hire a lawyer when charged with falsifying FBARs or not filing these forms. Legal representation may mitigate the damage of sentencing or reduce the base level in the offense to lower the sentencing guidelines. This will provide a better outcome if the lawyer is able to successfully argue the case.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.