30 Oct 2017 Manafort Indicted for Failing to File FBARs
Paul Manafort, the former campaign chairman to President Donald Trump, was indicted by a federal grand jury on October 27, 2017. Counts three through six of the indictment are for his failure to file reports of foreign bank and financial accounts for calendar years 2011-2014. He generated tens of millions of dollars in income as a result of his political consulting and lobbying work for Ukraine. In order to hide these payments from United States taxing authorities, he hid the money in foreign bank accounts and falsely reported that he had no foreign bank accounts.
All U.S. persons, including citizens, green card holders, and individuals considered U.S. residents based on the duration of their stay in the United States, are required to annually report their ownership of, or signature authority over, foreign bank accounts. The accountholder must report his or her foreign financial interest each calendar year in which the aggregate balance of all such foreign accounts exceeds $10,000 at any point during the year. The Bank Secrecy Act requires these reports because of their high degree of usefulness in criminal, tax, and other regulatory investigations.
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is the custodian for FBAR filings, and FinCEN provides access to its FBAR database to law enforcement entities, including the Federal Bureau of Investigation. The reports filed by individuals and businesses are used by law enforcement to identify, detect, and deter money laundering that furthers criminal enterprise activity, tax evasion, and other unlawful activities.
The form for such reporting is the Foreign Bank Account Report (or FBAR), which must be filed and received by the IRS by June 30th of each year. Failure to file the FBAR can carry significant monetary penalties and even criminal charges. Persons that have the obligation to file the FBAR and have missed the filing in prior years should consult their accountant or other tax professional.
Related to the FBAR filing is the filing of Form 8938 – Statement of Specified Foreign Financial Assets. The Form 8938 is filed with a person’s tax returns. The Form 8938 can require reporting of some of the same information reported on the FBAR, but also includes reporting of certain other foreign assets outside of foreign financial accounts, including stock and other interests in foreign corporations and other foreign entities.
If you believe you may have had an obligation to file the Form 8938 but did not file such a form, now is the time to contact your accountant or other tax professional. The government has increased scrutiny and focus on foreign accounts and asset reporting. To avoid monetary and criminal exposure, U.S. persons should be diligent in their reporting of foreign accounts and assets.Disclaimer: This blog and website are public sources of general information concerning our firm and its lawyers, as well as the information presented. They are intended, but not promised or guaranteed, to be correct, complete, and up-to-date as of the date posted. This blog and website are not intended to be, and are not, sources of legal opinion or advice. The materials, information, and communications on this blog and website do not apply to any particular person, entity, or situation, and do not apply to you or to your specific situation. You will need to consult with an attorney and/or other appropriate professional about your specific situation. Thank you.