Filing a False Streamlined Submission Leads to CPA Indictment

In recent months, the IRS has increased the auditing of streamlined submissions.

And, if the audit goes bad, a person could end up in the same boat as M. Booker – who was indicted for fraud and other tax crimes associated with making a false or fraudulent IRS streamlined Submission.

While the facts are always different, and there is no bright-line test for willful vs. non-willful — a person must be non-willful to qualify for Streamlined.

In fact, the single most important, and key component of going Streamlined is to ensure that the applicant is non-willful.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

U.S. vs. Booker (Case No. 19-60152-CR-SCOLA(s))

Let’s explore what happened to Mr. Brian Booker and his alleged fraudulent Streamlined Domestic Offshore Procedures Submission.

*Relevant portions of the indictment have been reproduced for reference.

Mr. Booker was a former CPA who resided in Florida

BRIAN NELSON BOOKER owned a cocoa trading company, Zaandam Trading Co., lnc., which was a corporation organized under the laws of the Republic of Panama. The defendant operated Zaandam Trading from Venezuela, Panam a, and his hom e in Florida.

Worldwide Income & Tax Reporting

The U.S. follows a worldwide income and tax reporting model. Essentially, that means a U.S. person must pay tax on worldwide income, and report foreign accounts to the U.S.

All United States citizens were obligated to report all income earned, regardless of where they earned it, on a U.S. lndividual Income Tax Return each year, and they were required to pay the taxes due on that income.

United States citizens were also obligated to report to the lRS each year whether they had an interest in, or signature authority over, a financial account in a foreign country for that year by checking Yes or No in the appropriate box on Schedule B of the IRS Form 1040 and identifying the country where the account was maintained.

Each year, United States citizens who had an interest in, or signature authority over, one or more financial accounts in a foreign country with an aggregate value of more than $10,000 at any time during the prior year were required to file with the Commissioner of Intemal Revenue a Report of Foreign Bank and Financial Accounts (FBAR”), using Form TD F 90-22.1 prior to January 1, 2013, or, after January 1, 2013, using FinCEN Form 114.

An FBAR identified, amongst other things, the name of the financial institution at which the account was held, the account number, and the maximum value of the account during the calendar year. The FBAR for the applicable year was due by June 30 of the following year.

Mr. Booker and his Company had Foreign Accounts

Mr. Booker had several foreign accounts, but the main catalyst for his downfall came from a Swiss bank, where he held a foreign account. That bank entered into a deferred prosecution agreement with the U.S.

Schroder & Co. Bank AG (“Schroder”) was a Swiss bank organized under the laws of, and domiciled in, Switzerland. From about March 2004 through at least September 2009 BRIAN NELSON BOOKER held a financial interest in, and signatory authority over, one or more accounts at Schroder, including an account ending in 4298 that was held in the name of Zaandam Trading.

*Mr. Booker had other foreign account as well.

The Swiss Bank Sold Mr. Booker Out to the Feds

Beginning on or about December 23, 2013, Schroder participated in the U.S. Department of Justice’s Swiss Bank Program , which provided a path for Swiss banks to resolve potential criminal liabilities in the United States.

ln conjunction with that program, Schroder provided the United States with information regarding BRIAN NELSON BOOKER ‘S customer relationship with the bank.

Another Defendant Allegedly Commits the Ultimate FBAR sin…

The IRS argues that Defendant had willfully failed to fully (and timely) report & disclose some his foreign accounts.

The reason why intentional partial reporting is so bad, is because on the one hand, it acknowledges defendant knew there was a requirement, but on the other hand, defendant intentionally did not report certain accounts.

Defendant Submits False Documents Through the Streamlined Program

You cannot submit to the streamlined program if you were willful.

The Streamlined Domestic Offshore Procedures (the “streamlined procedures”) allowed eligible taxpayers residing within the United States who failed to report gross income from foreign financial accounts on prior tax returns, failed to pay taxes on that gross income, or who failed to submit an FBAR disclosing foreign financial accounts, to voluntarily disclose their conduct to the IRS.

Taxpayers who were eligible under the Streamlined procedures were subject to substantially lower penalties than those provided by other IRS programs.

ln order to be eligible for treatment under the Streamlined procedures, taxpayers were required to tile amended tax returns for the most recent three years for which the U.S. tax return due date had passed.

Taxpayers who wished to take advantage of the Streamlined procedures were required to certify under the penalties of perjury that their failure to report all income, pay all tax or submit all required retuns was due to non-willful conduct.

Under the terms of the Streamlined procedures, the IRS defined non-willful conduct as conduct that was due to negligence, inadvertence, or mistake, or conduct that was the result of a misunderstanding of the law.

On or about October 14, 2015, BRIAN NELSON BOOKER submitted to the IRS a Certification by U .S. Person Residing in the United States for Streamlined Domestic Offshore Procedures (IRS Form 14654, streamlined submission”).

ln his Streamlined submission, the defendant certified under the penalties of perjury that he learned about the FBAR filing requirements in 2008 and that he mistakenly believed that only personal financial accounts had to be reported on the FBAR.”

The defendant also certified under the penalties of perjury that he was eligible for treatment under the Streamlined procedures and that his failure to report all income, pay all tax, and submit all required information returns, including FBARS, was due to non-willful conduct.

Based on the evidence the IRS already had in its possession, they believed Defendant provided false statements to the IRS in his streamlined application.

IRS Streamlined Domestic for U.S. Resident – Avoid a Larger Offshore Penalty

How to Qualify for Streamlined Domestic Offshore?

The eligibility requirements to qualify for the Streamlined Domestic Program can be broken down further into the following elements:

A. Were You Non-Willful?

Generally, if a person was unaware that there was a foreign account, foreign income, or foreign asset reporting requirement, the applicant may qualify as non-willful.

Unfortunately, there is no bright-line test, and a more complex “totality of the circumstances” analysis is required.

Non-Willful vs. Lower Standards of Willfulness

Willfulness does not mean intent.

There can be “lower” forms of willfulness, which do not require willful or intent — these additional willful standard are referred to as:

B. Did You Previously File “Timely” Tax Returns?

In order to qualify for the Streamlined Domestic Offshore Procedures, a person must have previously filed tax returns, and they must have been filed “timely,” when they were originally filed.

If you meet the requirements of A. and B. above, then you may qualify for the Streamlined Domestic Offshore Procedures.

*The “timely return” requirement does not apply to the Streamlined Foreign Offshore Procedures.

How to Apply to the Streamlined Domestic Offshore Procedures

If you previously filed U.S. Tax Returns “timely,” and are non-willful you generally qualify for the Streamlined Program.

The Taxpayer is required to file original or amended tax returns, file all necessary international reporting forms, and prepare a non-willful certification on IRS Form 14654 to reduce their Non-Willful Title 26 Miscellaneous penalty to 5%.

*Applying to the Streamlined Domestic Offshore Procedures can be deceptively more complex than it may appear at first glance.

IRS 5% Streamlined Penalty – How to Calculate?

We have prepared a separate article detailing the steps you take in order to calculate the IRS 5% Streamlined Penalty.

Streamlined Domestic Offshore Procedures 2018 (or 2019) Ending?

There is no knowing if the Streamlined Domestic Offshore Procedures Ending date is coming now, or later. BUT, the IRS reserves the right to end the program at any time and has indicated that the program “won’t last forever.”

Inexperience in Streamlined Domestic or Streamlined Foreign Can Prove Fatal

Some tax attorneys who are not specialists handle Streamlined cases as part of their general tax practice, and are all too quick to submit someone “Streamlined,” when they were willful. This can lead to disastrous results for the client, and put the client’s finances (and freedom) in jeopardy.

Golding & Golding (Board Ceritfied Specialist in Tax Law)

Golding & Golding (Board Certified Specialist in Tax Law)

Interested in the Streamlined Domestic Offshore Procedures?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

Golding & Golding specializes in Streamlined Domestic and Foreign Offshore Procedures. Contact our firm today for assistance with getting compliant.