We have advised foreign nationals living and working in the United States to come into compliance with IRS FBAR requirements for quite some time. One recent example of the risks faced by failing to come into FBAR compliance is a six month prison sentence to an Indian foreign national who resides in the United States for hiding offshore accounts from the IRS. The individual failed to list offshore accounts in India and the United Arab Emerates (UAE) and declare the interest received from those accounts on his IRS FBAR reports and tax returns. The IRS successfully obtained transaction details from the offshore institutions that clearly demonstrated that deposits in the offshore institutions exceeded amounts declared on his US tax return.
The Indian foreign national, the owner of a medical device company, was initially indicted along with his wife and two of his sons. The IRS accused the group of willfully failing to list the offshore accounts and under-reporting income in the United States as well as interest earned in the offshore accounts. It is important to note that his wife and sons were not named in the prison sentence handed down in federal court. The amount of the FBAR penalty assigned by the IRS to this individual was more than $14 million.
The individual sold medical devices offshore, and directed clients to make payment to the accounts in India and the UAE. The IRS produced evidence, including internal communications and emails with local bank HSBC and other financial institutions. The direct information sharing agreements between the IRS and foreign banks and financial institutions has yielded important information to the IRS regarding the activities of US citizens and foreign nationals who maintain offshore bank accounts, investment accounts, investments and assets. It doesn’t matter if you had these accounts for a long period of time before coming to the US or the amount of transactions occurring within the accounts. Those who believe the IRS will never identify them personally are sadly mistaken, and the example of the individual above is yet another warning from the IRS that the time to come into compliance with the reporting of offshore accounts and IRS FBAR requirements is now. If you have offshore bank accounts, investments, assets or income and have not filed an OVDP or streamlined application with the IRS we invite you to contact us immediately for a free consultation at 866-631-3470.
