A major costly tax mistake has raised its ugly head in the Paul Manafort case. A costly tax planning lesson is in store in light of the high profile case. This tax mistake could cost a taxpayer up to $100,000, so take note. The main lesson: tell the IRS and Treasury about your foreign accounts, or else risk the penalty. Manafort, a former campaign chairman for President Trump, was found guilty of eight criminal counts , including one count of failure to file foreign bank account reports.
He was also found guilty of five counts of tax fraud and two counts of bank fraud. U.S. DIstrict Court Judge T.S. Ellis declared a mistrial on 10 remaining counts in the bank fraud and tax crimes trial after the jurors said they could not reach a consensus. Richard Westling, one of Manafort’s attorney’s and a lawyer with Epstein Becker and Green, had no comment.
The takeaway from all this is that you don’t have to be a high profile political operative to run afoul of the reporting requirements around foreign bank accounts. A major costly tax mistake can be as simple as not telling the IRS that you have foreign bank accounts with money in them. Americans residing abroad, for instance, have found themselves shelling out for taxes owed in the U.S. and for related accounting expenses. The U.S. taxes individuals based on the citizenship of its taxpayers, not their residency.
Since 2009, more than 56,000 taxpayers have notified the IRS and Treasury of their oversea accounts and have paid more than $11.1 billion in back taxes, penalties and interest. Americans with foreign bank accounts have until April 15th, to file a Report of Foreign Bank and Financial Account, or FBAR, with the Treasury’s Financial Crimes Enforcement Network. Otherwise a major costly tax mistake can happen.
If you’re required to submit a FBAR, you may also need to turn in a statement of specified foreign financial assets–Form–8938–to the IRS when you file your income tax return.