In at least the second such instance that we’re aware of, the Government has brought charges related to filing a false streamlined submission, among other things.
Excerpt below from the DOJ press release:
A federal grand jury in Alexandria, Virginia, returned an indictment on March 3, 2021, charging a Virginia man with failing to file Reports of Foreign Bank and Financial Accounts (FBARs) and filing false documents with the IRS.
According to the indictment, Azizur Rahman of Herndon, had a financial interest in and signature authority over more than 20 foreign financial accounts, including accounts held in Switzerland, the United Kingdom, the Republic of Singapore, and Bangladesh. From 2010 through 2016, Rahman allegedly did not disclose his interest in all of his financial accounts on annual FBARs, as required by law. Rahman also allegedly filed false individual tax returns for the tax years 2010 through 2016 that did not report to the IRS all of his foreign bank accounts and income.
Rahman is also charged with filing a false “Streamlined Submission” in conjunction with the IRS Streamlined Domestic Offshore Procedures. Those procedures allowed eligible taxpayers residing within the United States, who failed to report gross income from foreign financial accounts on prior tax returns, failed to pay taxes on that gross income, or who failed to submit an FBAR disclosing foreign financial accounts, to voluntarily disclose their conduct to the IRS and to pay a reduced penalty if their conduct was non-willful. The indictment alleges that Rahman’s Streamlined Submission did not truthfully disclose all the foreign bank accounts in which he had an interest, and falsely claimed that his failure to report all income, pay all tax, and submit all required information returns, such as FBARs, was non-willful.
If convicted, Rahman faces a maximum sentence of three years in prison for each of the counts related to filing false tax documents. Rahman also faces a maximum sentence of five years in prison for each count relating to his failure to file an FBAR or filing a false FBAR.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Streamlined procedures are for non-willful taxpayers only
The indictment alleges that in the SDOP filing, the taxpayer disclosed 3 Swiss accounts when he allegedly had financial interest “over more than twenty additional foreign bank accounts in at least three other foreign countries” which total in the millions of dollars. They were not reported on the FBAR. It appears that many of these concealed accounts were held through his foreign business entities. The indictment also alleges that taxpayer did not report all income, but does not specifically state whether taxpayer disclosed these entities on Form 5471 or whether he disclosed the foreign income from these entities. There seems to be quite a bit going on here.
The indictment also states that the taxpayer has left the United States. “On or about December 17, 2019, after receiving information about the criminal investigation against him, Azizur Rahman relocated from the United States to a country that has no extradition treaty with the United States. He has remained outside the United States through the date of this Indictment.”
What should non-compliant taxpayers do?
If taxpayers are non-compliant with the foreign asset and income reporting requirements, they should consider applying to one of IRS’ voluntary disclosure programs:
- Voluntary disclosure program
- Streamlined domestic offshore program
- Streamlined foreign offshore program
- Delinquent international information return submission procedures
- Delinquent FBAR Submission Procedures
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