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Sentencing Guidelines For A Taxpayer Charged with FBAR Violations



Do You Have Foreign Income?

In case you have foreign income or assets, you might be under an obligation to file a Report of Foreign Bank and Financial Accounts (FBAR) disclosing your assets and income to the IRS. The FBAR filing requirements specifically apply to US taxpayers with financial interest in, or signature authority over a financial account or foreign bank with a value of at least $10,000 at any point.

These FBAR requirements extend to U.S. residents, U.S. citizens and various kinds of business entities, such as limited liability companies (LLCs), corporations and partnerships. Keep in mind that FBAR violations, which usually involve failure to maintain relevant financial records or failure to file an FBAR, could result in severe penalties, especially if these violations are “willful.”

Failure To File

Since 2017, any failure to file can lead to harsh sentencing; this depends on how much you or your business has in foreign financial institutions or offshore accounts. A failure to disclose and furnish the information is usually an intentional act to deceive the IRS. You have to file the FBAR paperwork, as long as your accounts have over $10,000.

The IRS might ensure the taxpayer faces criminal charges; also, if your account has millions of dollars, then financial penalties could easily exceed one million dollars. It can also lead to both civil and criminal charges filed by the tax agency.

A flat fine, in most cases, of $100,000 is the maximum financial penalty for FBAR violations which are deemed willful; however, this may constitute up to half of the total amount in the bank account discovered.

Sentencing Vague Guidelines

In addition to the standard $100,000 maximum, the individual could face harsh criminal charges with as much as five years in prison. It can amount to millions of dollars in damages owed to the IRS; however, the person could also lose access to their account when they are in jail or prison.

Changes to sentencing guidelines alter on a frequent basis, and some are insignificant. However, more serious guidelines may cause severe ramifications to people who are violating the tax rules.
Even when a person pleads guilty, the IRS might not lower the sentencing below the specified guidelines. Also, the more funds hidden from the agency, the higher is the Base Offense Level; this can further increase the penalties and fines.

Special Offenses

If the individual affected was aware of the illegal activity or was intentionally committing illegal acts, he could face worse sentencing. Also, the same may happen if the offense deals with bulk cash deals or smuggling.

On the other hand, in case the defendant didn’t act in a reckless way with their funds, it may reduce the base offense for sentencing purposes.

Have a question? Contact Venar Ayar.

 

 

Venar Ayar

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