Tailor Loses Shirt To FBAR Penalties

TaxConnections Picture - suit with a shirt and a tieA few weeks ago, Mohanbhai Ramchandani, pled guilty to violating the laws implementing the United States Treasury Department’s Foreign Bank and Financial Accounts Report (FBAR) as well as to filing false tax returns to conceal $3.2 million earned in his swanky New York City tailoring business. While the tailor could probably easily estimate a customer’s suit size, he had completely underestimated the tenacity of the Internal Revenue Service to “follow the money”… But, find it they did, in bank accounts located at the Bank of India, in Hong Kong and at accounts in Canada and India (some in his son’s name). Between 2007 and 2009, Ramchandani did not pay tax on the hidden $3.2 million he had stashed in the foreign bank accounts and, in violation of FBAR laws, he failed to report that he had those accounts. Ramchandani’s cheating resulted in a tax loss of US$ 736,002 for the 3-year period 2007, 2008 and 2009. When sentenced, Ramchandani faces up to five years in prison (let’s hope the tailor likes black stripes!). Also, he faces a penalty of $1.6 million for the FBAR violations, restitution to the Internal Revenue Service of $736,002.00 for unpaid taxes and probably oodles and oodles of interest!

Meanwhile… back at the ranch, eighty percent of the Treasury’s workforce has been furloughed.

In accordance with Circular 230 Disclosure

Virginia La Torre Jeker J.D., has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has 30 years of experience specializing in US and international tax planning as well as international commercial transactions. She has been based in Dubai since 2001; prior to that time she worked in Hong Kong for 15 years as a US tax consultant for international law firms, major banks (including HSBC) international accounting firms (Deloitte) and trust companies. Early in her career she worked in New York with the top-tier international law firm, Willkie Farr & Gallagher.

Virginia is regularly asked to speak at numerous conferences and seminars for various institutes and commercial organizations; publishes a vast array of scholarly works in her area of expertise, been interviewed by CNN and is regularly quoted (or has her articles featured) in local and international publications. She was recently appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. She was a guest lecturer at the University of Hong Kong, LL.M Program (Law Department) and served as an adjunct Business Law professor at the American University of Dubai and at the American University of Sharjah where she also taught the legal / ethical aspects of internet law and internet based transactions.


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