It had been expected that a Responsible Officer (RO) would be required to certify, under penalty of perjury, as to compliance with FATCA. The original post describing the possible consequences to a Responsible Officer making a false certification under FATCA can be found here.

Recently, the Internal Revenue Service opened the FATCA registration system and published additional guidance. There is not a full length “FFI Agreement” as the IRS had previously stated would be published in a Revenue Procedure before the opening of the registration site; instead, the Agreement is more of a broad and open-ended certification by the RO that the FFI will comply with FATCA. This is similar to that provided in a recent draft of Form 8957. The specific certification is as follows:

Financial Institution – Agreement

I, Joe Smith, as RO for the Financial Institution, certify that, to the best of my knowledge, the information submitted above is accurate and complete and agree that the Financial Institution (including its branches, if any) will comply with FATCA obligations in accordance with the terms and conditions reflected in regulations, intergovernmental agreements, and other administrative guidance to the extent applicable to the Financial Institution based on its status in each jurisdiction in which it operates.

Notably missing from this certification is a declaration that it is made under penalties of perjury. One of the elements of the “tax perjury” offense under section 7206(1) is that the return, statement, or other document contain a written declaration that it was made under the penalties of perjury. Thus, an RO might no longer be subscribing to a potential felony under section 7206(1) as the requisite perjury statement has been removed from this certification (NB: Other certifications required of an RO may include the perjury statement).

An RO subscribing to a falsified document or making a fraudulent statement should, however, still be concerned with the tax crime of submitting false documents under section 7207. These cases typically involve false, altered or fictitious documents presented by taxpayers under audit in response to requests for substantiation of claimed itemized deductions or other deductions or credits on the return; however, section 7207 can apply more broadly. The elements of the offense are:

 

1.  The delivery or disclosure to any officer or employee of the Internal Revenue Service of any list, return, account, statement, or other document;

2.  The return, statement, or other document is false or fraudulent as to a material matter; and,

3.  Willfulness or knowledge by the individual that the return, statement, or other document is false or fraudulent as to a material matter.

A tax deficiency is not required, and the false statement does not need to have actually influenced the IRS. In addition, section 7207 may apply even when the taxpayer delivers a document prepared and signed by another person, but here only if the taxpayer knows the document contained a material falsehood. Venue in section 7207 cases lies where the false or fraudulent document is delivered or disclosed to the Internal Revenue Service. The statute of limitations in section 7207 cases is six years from the date the false document is delivered or disclosed to the Internal Revenue Service. Upon conviction, the taxpayer may be fined not more than $100,000 (see Criminal Fine Enforcement Act of 1984, 18 U.S.C. §3571), or imprisoned not more than one year, or both.

These two offenses share similar elements with one notable and objective difference. While one happens to have somewhat less severe consequences, both are tax crimes.

In accordance with Circular 230 Disclosure