How Immigration, FBAR Violations, & Tax Evasion Intersect in US v Gatta

How Immigration, FBAR Violations, & Tax Evasion Intersect in US v Gatta

When Immigration, FBAR Violations, & Tax Evasion Intersect

How FBAR Violations & Tax Evasion Intersect: In the case of US v Gatta, the Government seeks to pursue Defendant for tax crimes involving evasion — along with violating the criminal foreign bank and financial account form reporting FBAR under 31 USC 5322, as well as Immigration Fraud. An important takeaway from this case is that it is pretty rare when a US Person is criminally indicted for only failing to report a foreign bank account or other financial account – nearly always there are other complex criminal allegations at play. This case is a perfect example of how to remove yourself from the online fear mongering and inexperienced attorneys who want you to believe any violation of FBAR can be criminal (read: it’s not). Nearly always, a criminal FBAR indictment is ancillary or in addition to other more common tax crimes such as money laundering and/or tax evasion. Let’s go through the basics of US v Gatta to to get a feel for what facts are generally necessary for the US government to pursue a criminal FBAR indictment. 

US v Gatta (Alleged Willful FBAR Violation)

In this case the government allegedly willfully and knowingly failed to report her foreign accounts on the FBAR for several years.

      • On or about the due dates set forth below, within the Southern District of Florida, and elsewhere, the defendant, did unlawfully, willfully, and knowingly fail to file with the Commissioner of Internal Revenue an FBAR disclosing that she had an interest in, and signature and other authority over, a bank, securities, and other financial account in a foreign country…

Defendant Allegedly Attempted to Conceal Repatriation of Foreign Money

The government alleges Defendant utilized her Father’s bank account as a conduit in order to transfer the foreign money into the US:

      • “As part of her scheme,  repatriated funds held in her undisclosed BSI account (ending in 82962) by first transferring those funds to her father’s BSI account (ending in 82933), and then causing BSI to transfer the funds from her father’s BSI account to the defendant ‘ s domestic bank accounts.”

Defendant Allegedly Failed to Report Foreign Income

The government alleges Defendant knowingly failed to report the passive income (interest and dividends from the Foreign Account) to the IRS on annual tax returns.

      • “As part of her scheme, [Defendant] also failed to file federal tax returns that reported, among other items, the dividend and interest income that she earned through her undisclosed BSI account (ending in 82962) for tax years 2004 through 2014 and failed to pay taxes on any of her income.”

Defendant’s Alleged Immigration Fraud

A key piece of information from this case is that the US Government also alleges that Defendant committed Immigration Fraud:

      • “On June 27, 2011, [Defendant] signed, under the penalties of perjury, an Application for Naturalization (Form N-400) , which she then submitted to the U.S. Citizenship and Immigration Services. Part 10, Question 15 of the defendant’s Application for Naturalization asked: “Have you ever committed a crime or offense for which you were not arrested?” [Defendant] answered “No.”

      • The defendant did not disclose her failure to file federal tax returns that reported the existence of her BSI account (ending in 82962), or the dividend and interest income that the defendant earned each year through that foreign account, and [Defendant] did not disclose her failure to file FBARs reporting her ownership of, and control over, foreign financial accounts.”

Criminal Foreign Account Indictments are Complex

When a person missed their FBAR reporting – and/or other international information reporting – it is usually not a criminal matter prosecuted by the US Government – unless other criminal factors are at play. This case is a good example of the additional type of facts that usually accompany a criminal FBAR case brought by the US Government.

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