The failure to file FBARs is a key issue in the Manafort trial and ultimately the charges he faces regrading tax evasion. One of the witnesses called upon was Paula Liss, a certified fraud examiner, anti-money laundering specialist, and senior agent for the Treasury Department’s Financial Crimes Enforcement Network or FinCEN. The Report of Foreign Bank and Financial Accounts or FBAR is required for any US taxpayer with more than $10,000 in any offshore account, or the accrued balances of all offshore bank, investment or trust account.
According to Ms. Liss’ testimony, “There were no FBARs (FinCEN Report #114) in FinCEN’s system of record.” This indicated Mr. Manafort had failed to comply with IRS Requirements to File an FBAR for each tax year as required by US law. Mr. Manafort and his tax preparers did not disclose over 30 bank accounts of offshore shell LLCs and corporations which he controlled. Ms. Liss testified the requirement to file FBARs extends to those with a 50% or higher ownership stake in an offshore business and its related account(s). She also noted the ownership of an account can include “indirect ownership.”
The vast majority of offshore banks provide detailed direct electronic reporting to the IRS regarding the true ownership of bank accounts around the world. This data includes details such as who opened the account, signatories with authorization to access the account as well as balance and transaction data. It is quite easy for the IRS to compare the information provide by global financial institutions and sovereign tax agencies with their own databases. Those who have not complied with FBAR filing requirements will stick out like a sore thumb.
The failure to file FBARs is a key issue in the Manafort trial but it is also a challenge for many San Diegans. If you are a foreign national living and working in the San Diego area, you are likely to have offshore accounts which meet FBAR reporting requirements. We invite anyone with questions regarding FBAR preparation and compliance to contact us or call 866-631-3470 for a free consultation.