- 1 18 USC 1001 – In General
- 2 How Do People Get Caught Lying to the IRS?
- 3 Undisclosed Foreign Income, Assets or Investments?
- 4 What Can You Do?
- 5 We Specialize in Safely Disclosing Foreign Money
- 6 Who Decides to Disclose Unreported Money?
- 7 What Should You Do?
- 8 4 Types of IRS Voluntary Disclosure Programs
False or Fraudulent Statements to the IRS (Foreign Income & Assets)
Sometimes a small intentional misrepresentation or omission is no big deal. It may be ethically wrong, but it does not culminate to a life-changing event.
But, when you’re dealing with the US government and the IRS in particular, making fraudulent statement may subject you to significant civil and/criminal penalties – including several years in prison.
18 USC 1001 – In General
As provided by the code section:
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both.
18 USC 1001 – Limitations on Applicability
If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.
(b) Subsection (a) does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding.
(c) With respect to any matter within the jurisdiction of the legislative branch, subsection (a) shall apply only to—
(1) administrative matters, including a claim for payment, a matter related to the procurement of property or services, personnel or employment practices, or support services, or a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch; or
(2) any investigation or review, conducted pursuant to the authority of any committee, subcommittee, commission or office of the Congress, consistent with applicable rules of the House or Senate.
How Do People Get Caught Lying to the IRS?
Often times it is just a small lie that leads to a bigger lie, that leads to a criminal investigation — and then possible prosecution.
Here’s an example that we deal with an international tax front:
David is in an audit. The audit does not deal directly with foreign accounts, but the IRS is aware that David has unreported foreign money. The IRS is also aware that David received a FATCA letter but did not respond.
This type of audit is called a reverse eggshell audit – because the IRS has information which is incriminating, and the IRS will ask David indirect questions to assess his veracity. Specifically, if given the opportunity to come clean, would David continue making intentional misrepresentations or not.
The IRS asks David if he has any other unreported income, and he says no. This is despite the fact that David has foreign investments generating about $50,000 a year, of which David has not disclosed.
The IRS agent refers the matter to the special agent for a criminal investigation. Then, based on the facts and circumstances uncovered by the IRS special agents, they may decide whether or not to refer the matter for criminal indictment.
Undisclosed Foreign Income, Assets or Investments?
If you have unreported money abroad, typically the best way to avoid a similar fate is to proactively get into compliance using one of the approved IRS offshore voluntary disclosure programs.
What Can You Do?
Presuming the money was from legal sources, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe (In over 65 countries!)
Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.
Examples of areas of tax we handle
- Unfiled Tax Returns
- Unreported Income Penalties
- International Tax Investigations (FATCA and more)
- FBAR Investigations
- International Tax Evasion
- Structuring Investigations
- Eggshell and Reverse Eggshell Audits
- Divorce and Offshore Accounts
- Foreign Mutual Funds
- Foreign Life Insurance
- Fixing Quiet Disclosure
- Foreign Real Estate Income
- Foreign Real Estate Sales
- Foreign Earned Income Exclusion
- Subpart F Income
- Foreign Inheritance
- Foreign Pension
- Form 3520
- Form 5471
- Form 8621
- Form 8865
- Form 8938 (FATCA)
Who Decides to Disclose Unreported Money?
What Types of Clients Do we Represent?
We represent Attorneys, CPAs, Doctors, Investors, Engineers, Business Owners, Entrepreneurs, Professors, Athletes, Actors, Entry-Level staff, Students, Former/Current IRS Agents and more.
You are not alone, and you are not the only one to find himself or herself in this situation.
Sean M. Golding, Board-Certified Tax Law Specialist
Out of more than 200,000 practicing attorneys in California, less than 400 attorneys have achieved this Certified Tax Law Specialist designation.
The exam is widely regarded as one of (if not) the hardest tax exam given in the United States for practicing Attorneys. It is a designation earned by less than 1% of attorneys.
What Should You Do?
Everyone makes mistakes. If at some point you discover that you should have been reporting your foreign income, accounts, assets or investments, the prudent and least costly (but most effective) method for getting compliance is through one of the approved IRS offshore voluntary disclosure programs.
4 Types of IRS Voluntary Disclosure Programs
There are typically four types of IRS Voluntary Disclosure programs, and they include:
- Traditional (IRM) IRS Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
Contact us today; we can help you.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.