Taxpayer Criminally Convicted of Willfully Failing to Disclose His Foreign Bank Accounts on His Tax Returns

Posted on July 03, 2020

If you have one or more foreign bank accounts, you may be required to file a Report of Foreign Bank and Financial Accounts (commonly referred to as an FBAR) with your federal Form 1040 tax returns when they are filed. Generally speaking, you are required to file an FBAR if you have a financial interest in or signature or other authority over at least one financial account located outside the United States where the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year. If you do not disclose your foreign bank accounts on your tax returns when they are filed, the IRS can prosecute you criminally for failing to disclose those accounts.

A taxpayer was recently criminally convicted of failing to file FBARs with his tax returns for 3 years. The taxpayer had Canadian bank accounts which represented an overwhelming portion of his total income. The taxpayer used his sister’s Canadian address for the bank accounts in order to avoid disclosing these accounts on his tax returns. The taxpayer argued that he relied on another’s advice and that his failure to include the FBARs on his tax returns was negligent and not willful. The Court held that the taxpayer’s mistaken understanding does not excuse the non-filing of the FBARs. In fact, the Court held that he knew, or should have known, that relying solely on another’s advice without further investigating that advice was not good enough. What a lousy reason to be convicted of a crime, eh?

Do you have any foreign bank accounts that you did not list on your already filed tax returns? Call us, we can help!