Thoughts on the Manafort & Gates Indictment: Focused on FBAR Violations

FBAR, Manafort and Gates indictmentOn Monday, October 30, 2017, Special Counsel Robert Mueller unsealed the indictment against former Trump campaign chairman Paul Manafort and his business associate, Richard Gates. The twelve count indictment (available here) charges Manafort and Gates with multiple offenses relating to the pair’s alleged advocacy on behalf of the Government of Ukraine and Ukrainian political parties and the treatment of funds received in connection with these activities.

In particular, the indictment alleges that Manafort and Gates, acting through foreign nominees, opened numerous offshore bank accounts and deposited some $75 million in proceeds from their Ukraine-related work into these accounts. Manafort allegedly wired a portion of the funds to the United States, where he used them to buy, inter alia, $849,215 worth of men’s clothing from a single store in a little over five years, $655,500 worth of landscaping services for a Hamptons property, and a $2.85 million condominium in Manhattan.… Read More

A Guilty Plea in a Tax Evasion Case May Not Sustain a Civil Tax Deficiency

tax court, evasionBohdan Senyszyn was an IRS revenue agent who dabbled in real estate with a local developer. After the developer filed a civil case alleging he had embezzled from their ventures, the IRS took a hard look at Mr. Senyszyn’s tax returns:

  • As part of the investigation, an IRS agent concluded that Mr. Senyszyn had embezzled $252,726 from the developer and failed to report it.
  • Senyszyn was charged with tax evasion (among other crimes) in an information filed in September 2007.
  • Simultaneously, Mr. Senyszyn agreed to plead guilty; his plea agreement provided that he “knowingly and willfully did not include about $252,726.00 in additional income that he acquired in 2003.”
  • Senyszyn entered a plea of guilty in accordance with his plea agreement.
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Tax Enforcement Going Forward: Resources, Cheating, and Perceptions of Fairness

IRSAs we head into the New Year and look back on 2015, this blog reflects on one facet of the future of tax enforcement, at least in the near term. The trend in decreasing resources devoted to tax enforcement may erode widespread respect, and therefore compliance, with the tax code. One reason for this is because if people don’t believe that the tax code is fairly and uniformly enforced against tax cheats, they themselves will be more inclined to cheat.

Although this is presumably an obvious or intuitive point, the psychology behind it is perhaps more complex than simply observing that people are more inclined to cheat if they believe that they can get away with it.Read More

A Conversation with UVA Law’s Brandon Garrett About the DOJ’s Swiss Bank Program

Brandon L. GarrettRecently I had the opportunity to speak with my former law professor, Brandon Garrett, about the DOJ’s Swiss bank program. Professor Garrett is the Justice Thurgood Marshall Distinguished Professor of Law at the University of Virginia School of Law, and author of the recent book Too Big to Jail: How Prosecutors Compromise with Corporations. Professor Garrett has written and spoken extensively about white collar corporate prosecutions and the use of non-prosecution and deferred prosecution agreements in the corporate prosecution context.

A little background to our conversation. The DOJ’s Swiss bank program provides in part a path for Swiss banks that believe that they may have committed tax-related criminal offenses in connection with undeclared bank accounts held by U.S.… Read More

Update: American Expats’ Challenge to FATCA Dealt Another Blow

After their legal challenge to FATCA was dismissed by the Federal Court of Canada, discussed previously in this blog, two American expats sought an injunction from the Canadian Federal Court of Appeal to bar the Canadian Revenue Agency (CRA) from transmitting account data to the IRS, in accordance with the IGA between the two countries.

On September 30, 2015, the court denied the requested injunction, and noted that the CRA intended to disclose the account data later that same day, in accordance with the IGA’s terms. Apparently Canada is not taking advantage of the IRS’s recent extension of the disclosure deadline for Model 1 IGA countries, like Canada, to September 30, 2016.… Read More

Canadian Court Rejects American ExPats’ Challenge to FATCA

The Federal Court of Canada recently dismissed a suit by two American expatriates challenging Canada’s role in implementing the Foreign Account Tax Compliance Act (FATCA), a U.S. law designed to thwart tax evasion. The ruling came as Canada prepares to make its first disclosure to the United States of information regarding financial accounts held in Canada by U.S. persons pursuant to the Intergovernmental Agreement (IGA) between the two countries, which was enacted in connection with FATCA.

FATCA, enacted in 2010 and effective July 1, 2014, is designed to prevent tax evasion by making it nearly impossible for U.S. taxpayers to maintain undisclosed offshore assets.… Read More

Tax Evasion: A Short Trip from Being in Debt to Being in Jail.

Tax evasion is a serious federal offense; it is a felony punishable by up to five years in jail. Tax evasion occurs when someone “willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof . . . .” 26 U.S.C. § 7201.

Most tax evasion cases involve people who attempt to avoid being assessed for taxes through a variety of means such as skimming cash or creating fake deductions; these maneuvers qualify as “attempts . . . to evade or defeat any tax.” Cases that focus on willful “attempts . . .… Read More