District Court holds for the IRS, and grants the Internal Revenue Service Default Judgment against Taxpayer who owed several million dollars in unpaid FBAR penalties.
The IRS means business when it comes to FBAR Enforcement – but everything in context, right?
Be careful what you read.
Defendant did not just wake up one day, have some unreported accounts, and find himself at the receiving-end of a Default Judgment for more than $18,000,000 in FBAR Penalties.
It was a long process, which included significant unreported money, a complex scheme to defraud the U.S., and a criminal tax plea deal that was entered into (from the same ‘nucleus of facts’) two years before the FBAR Default Judgment was entered.
IRS Granted Default Judgment for FBAR Penalties
It is important to keep in mind that more than two years ago defendant Masud Sashar entered into a criminal plea agreement (Criminal Tax).
The FBAR Default Judgment is in furtherance of those facts, stemming from international tax fraud, and specifically:
- Conspiracy to Defraud the United States
- Corruptly Obstructing and Impeding Internal Revenue Laws
FBAR Penalties Can Be Tough
When it comes to FBAR Penalties, the IRS means business, but again — it must be considered in context of the specific facts of any FBAR case.
Not everyone with unreported accounts will be found.
And, even those who are found, if they timely submit to IRS Tax Amnesty they can usually limit, minimize, or avoid the worst FBAR penalties like the ones that Masud Sashar faced.
Still, as we learned from The Breakfast Club, that sometimes — If you mess with the bull, you get the horns.
Now that a default judgment has been issued (unless appealed), the IRS has more ways to collect against Taxpayer.
Important Case Facts
As provided in the underlying plea deal:
SARSHAR intended that his foreign bank accounts be kept secret and believed that RMl understood his wishes.
For example, RMl suggested that SARSHAR open the Israeli Bank. A account using a code name and recommended that SARSHAR not receive account statements by mail in the United States.
To that end, SARSHAR elected to pay a fee to Israeli Bank A for its “hold mail” service and Israeli Bank A did not send SARSHAR account documents by mail.
Instead, RMl brought hard copies of SARSHAR’s Israeli Bank A account statements during his visits to the United States and he did not leave copies of those statements with SARSHAR.
To further maintain the secrecy of his account, SARSHAR’s meetings with RMl usually occurred in SARSHAR’s car.
At no time did Defendant SARSHAR report the existence of his foreign bank accounts at Israeli Bank A or Bank Leumi to the United States.
In fact, in 2006, 2007, 2009, 2010, and 2011, SARSHAR filed false Forms TD F 90-22.1 (FBAR), reporting only his accounts in Mexico.
Why did defendant get hit so hard?
- Defendant maintained anonymous foreign accounts using number accounts
- Defendant directed (paid for) the bank to intentionally hold his mail
- Defendant staged meetings with bank officers and others in his car
- Defendant selectively reporting certain accounts (Mexico vs. Israel)
- Defendant had Unreported deposits totaling almost $10,000,000 into the unreported accounts
FBAR Default Judgment
The IRS has been pursuing penalties against Masud Sarshar for many years. He never paid, and the IRS pursued default judgment to “secure the bag”
Case Ruling (Dated 2/22/2019)
On the United States of America’s motion for default judgment and for good cause shown: 1. Judgment is entered in favor of the United States and against Masud Sarshar in the amount of $18,853,787.60 as of November 30, 2018, plus subsequent statutory accruals plus costs.
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