The Streamlined Filing Compliance Procedure (SFCP) was “born” two years old. Two years ago the…
Consequences of Filing False Streamlined Filings
The IRS Streamlined Domestic Offshore Program (“SDOP”) allows eligible U.S. Taxpayers who failed to disclose foreign financial accounts to voluntarily disclose their conduct to the IRS and pay a reduced penalty. However, to be eligible for the SDOP program, the Taxpayer in failing to report foreign financial accounts must have been due to non-willful conduct. It is illegal for a taxpayer to file an SDOP when there was willful conduct resulting in harsh consequences. Taxpayers who fraudulently file an SDOP face criminal prosecution.
Recently, the IRS has taken fraudulent filings more seriously. In 2019 a federal grand jury indicted Brian Booker, a former CPA, for filing a false SDOP. The indictment alleged that Booker’s Streamlined submission falsely claimed that his failure to report all income, pay all tax, and submit all required information returns, such as FBARs, was due to non-willful conduct. If convicted, Booker faces a maximum sentence of five years in prison for each count relating to his failure to file an FBAR. He also faces a maximum sentence of three years in prison for each of the counts related to filing false tax documents.
In U.S. v Rahman, the taxpayer was indicted for failing to report foreign financial accounts and subsequently fraudulently filing documents to the IRS. According to the indictment, Mr. Rahman only disclosed interests in three foreign bank accounts. Specifically, the allegations against Mr. Rahman are that he made untrue statements on Form 14654. The government contends that he should have also listed his interests in 11 foreign accounts located in the United Kingdom, Singapore, and Bangladesh. If convicted Rahman faces a maximum sentence of three years in prison.
These cases show that taxpayers should be very careful in making a complete and correct Streamlined disclosure to the IRS. Advisors counseling taxpayers on Streamlined Procedures must confirm that all information reported on Form 14654 is truthful, accurate, and complete.
Taxpayers who have foreign financial accounts should contact Patel Law Offices. Over the past 10 years, our office has successfully advised and represented hundreds of taxpayers in their foreign account tax problems.
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