Seven of the charges that former Trump advisers Paul Manafort and Richard Gates face are for failing to report their foreign bank accounts, as required by the Financial Crimes Enforcement Network of the US Department of the Treasury. The US government requires both citizens AND Green Card holders to report all their foreign accounts annually when the combined value of any accounts outside of the United States exceeds the equivalent of $10,000 USD. The truth is that while failing to file a US tax return is not a criminal matter, failure to report foreign bank accounts is a criminal matter, with potential fines of fifty percent of the high balance of the unreported account and potential prison time. Manafort is not the first to be ensnared in this law: Beanies Babies founder Ty Warner was forced to pay $53 million in penalties in 2013, and in 2016 Dan Horsky an, emeritus professor of business administration at the University of Rochester was forced to pay a $100 million dollar fine and serve 15 years in prison after being found guilty of failing to file his FBARs and properly report tax.
The bad news is that while most US expatriates do not have anywhere near the level of wealth of Manafort, Warner, or Horsky, they are required to file their foreign bank accounts all the same, and failure to do so leaves anyone with more than $10,000 equivalent in foreign bank accounts open to fines of 50% of the high account balance and potential prison time. (As Manafort had also failed to report interest in several foreign companies, thus violating Controlled Foreign Corporation reporting rules, he’s subject to additional massive penalties.)
The good news is that had Manafort and Gates been proactive, they would have been able to take advantage of IRS programs that would have eliminated criminal penalties as well as potentially eliminated financial penalties, depending upon circumstances and intent.
Streamlined filing allows for those who are not criminally wilful to report their last three years of tax returns and last 6 years of foreign bank accounts, while paying no penalties on either tax due or FBAR violations.
American International Tax Advisers has experts with decades of experience helping US expatriates resolve serious tax issues, and can assist with both filing tax returns and FBARs. In many cases, clients owe no income tax and have no FBAR penalties. In some cases, clients are even owed tax refunds that they would have lost had they not filed properly.
Contact James Martin, Global Client Manager of American International Tax Advisers at James@aitaxadvisers.com for a free call to discuss how we can help you resolve your US tax issues.