President Donald Trump signed the new 2018 tax law “Tax Cuts & Jobs Act” (TCJA)…
Rare confluence of tax law and immigration law
A recent case highlights the rare confluence of tax law and immigration law. This week a federal grand jury indicted Lucia Andrea Gatta, with tax evasion and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) and naturalization fraud.
According to the indictment, Gatta was born in Chile and became a naturalized U.S. Citizen in 2012. The indictment alleges that in 2012-2014 Gatta failed to disclose her interest in a Swiss bank account on annual FBARs as required by law. Gatta also allegedly evaded assessment of income taxes on the interest and dividend income she earned in her Swiss bank account and failed to file tax returns with the IRS for tax years 2011-2014.
The indictment also charges Gatta with naturalization fraud. Gatta allegedly failed to disclose to the Department of Homeland Security’s U.S. Citizenship and Immigration Services (USCIS) that she had failed to report foreign dividend and interest income during her citizenship application process, and she allegedly presented misleading documents to USCIS to substantiate the false statements she made during her naturalization interview.
During naturalization, a Greencard-holder applicant must affirmatively state that he or she does not owe any taxes and has filed all required returns, including FBARs, and other international forms such Forms 8938, 3520, 8621, etc.
If convicted, Gatta faces a maximum sentence of five years in prison for each count relating to her failure to file an FBAR and tax evasion. She also faces a maximum sentence of one year in prison for each of the counts concerning the failure to file tax returns. If convicted of naturalization fraud, Gatta faces a maximum sentence of ten years in prison and automatic denaturalization.
This case reflects a rare confluence of tax law and immigration law, which are mutually distinctive legal areas, and generally differently and separately prosecuted in most instances. The case presents new risks for Greencard holders who wish to become citizens. Such individuals should carefully review their US tax compliance of foreign accounts and foreign income prior to naturalization.
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