Virginia Resident Charged for Willful Streamlined Filing: New 2021

Willful Streamlined Procedure Leads to Criminal Indictment

False Streamlined Offshore Filing Leads to Criminal Tax Charges

False Streamlined Offshore Filing Leads to Criminal Tax Charges (United States of America v. Azizur Rahman): To assist Taxpayers with getting into compliance for not properly disclosing foreign accounts in prior tax years — on the FBAR and other international information reporting forms — the IRS has developed various offshore amnesty programs. One of the more popular programs is the Streamlined Filing Compliance Procedures. But, those procedures are only available to taxpayers who are non-willful. Despite this fact, there are still some Taxpayers who still submit to the streamlined program — either because they believe they will not get caught or because they misunderstand the parameters of the program.

More often than not, it is because the Taxpayer was goaded by an unethical attorney who convinced them to submit to the streamlined program — even when the Taxpayer acknowledges they are willful.  These attorneys usually work in tandem with outside CPAs. Together, the Attorney and CPA intentionally convince the Taxpayer that even though they were willful, the tax noncompliance was “minor,” so they will not get caught.

These attorneys then intentionally misapply the principles of “Kovel,” to try to shield themselves from a malpractice lawsuit. Here is a case study example of how an unethical attorney convinces a willful taxpayer to go Streamlined.

Willfulness Disqualifies Taxpayer for Streamlined

No matter what any attorney or tax professional tells you, if you are willful you do not qualify for the streamlined program.  Even if you believe your noncompliance was minor — there is no de minimis rule for willfulness. In other words, if you are willful then you do not qualify for the streamline program.

US v Rahman

Mr. Rahman submitted to the Streamlined Program, but based on information the IRS had about the circumstances surrounding the noncompliance and subsequent disclosure, they determined him to be willful — and the case was referred to the Department of Justice; he was subsequently indicted for his alleged crimes

Let’s take a look at some of the key portions of the indictment:

• • • “On or about March 20,2015, Azizur Rahman disclosed to the Internal Revenue Service (“IRS”) that he had previously failed to properly report his financial interest in, or signature authority over, foreign bank accounts on his tax filings. Azizur Rahman claimed he was eligible for a reduced penalty for this past failure because he was unaware of his legal obligation to report his financial interest in, or signature authority over, his foreign bank accounts. In his disclosure, the defendant identified three bank accounts in Switzerland. He verified that the 2015 disclosure was a complete statement of all the foreign assets that he had failed to report in the six prior years.

    • The defendant’s 2015 disclosure to the IRS was false. Azizur Rahman’s disclosure did not report all the foreign bank accounts that he controlled in the six prior years. Azizur Rahman had a financial interest in, or signature authority over more than twenty additional foreign bank accounts in at least three other foreign countries, ail of which he had previously failed to report to the IRS, and which he continued to conceal on his 2015 disclosure.”

Foreign Account Background

• • • From at least June 2012 through at least October 2013, Azizur Rahman held a financial interest in, and signatory authority over, one or more accounts at Lloyds Private Bank held in his own name, including an account ending in 9295. In the paperwork to open the account, Azizur Rahman falsely reported he was a “Non-US Person.”

*Rahman has interest/ownership over many foreign accounts.

Schedule B to Report Ownership of Foreign Accounts

• • • “On or about the dates listed in the chart below, Azizur Rahman made and subscribed IRS Forms 1040 for the tax years listed below, which were filed with the IRS. On each of the Schedules B of these tax returns, Azizur Rahman claimed, in effect, that he did not have 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 those years.

    • For tax years 2014 through 2016, Azizur Rahman did, in fact, have a financial interest or signature authority over foreign financial accounts, including accounts at (i) Credit Agricole, (ii) UBP, (iii) Bank Asia, (iv) BRAG Bank, (v) Dutch-Bangla Bank, (vi) HSBC Bangladesh, (vii) MTB, (viii) One Bank, (ix) Pubali Bank, (x) Southeast Bank, and (xi) UCB. The defendant’s accounts at each of these banks had an aggregate value of more than $10,000 during those tax years, and, thus, Azizur Rahman was required to file an FBAR reporting those accounts.

    • Azizur Rahman failed to file timely FBARs for calendar years 2014 through 2016 with the Commissioner of Internal Revenue.”

Eligibility for the Streamlined Program

• • • “In order to be eligible under the Streamlined procedures, taxpayers were required to file amended tax returns for the most recent three years for which the U.S. tax retum due date had passed and certify under the penalties of pejury that their failure to report all income, pay all tax, or submit all required retums 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 good-faith misunderstanding of the law.”.

DOJ Press Release: Businessman Indicted for Not Reporting Foreign Bank Accounts and Filing False Documents with the IRS