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IRS Loses Two Offshore Tax Cases: Weil & Baravarian

Last month, a federal jury in Fort Lauderdale, Florida acquitted Raoul Weil, a former top UBS Swiss banking executive, of tax evasion charges. Weil was indicted in 2008 under 18 U.S.C. § 371 (“Conspiracy to commit offense or to defraud United States”) and it was alleged that he helped nearly 17,000 wealthy US persons hide $20 Billion in Swiss bank accounts from the IRS. Weil had been extradited to the US to stand trial after being arrested by Interpol while vacationing in Italy in 2013. He would have faced up to five years in prison and a $250,000 fine, if found guilty. Weil did not testify in the case.

From 2002 through 2007, Weil was head of Swiss Bank’s wealth management business, which included US cross-border business and other businesses. In July of 2007, he became the CEO a division that oversaw the United States cross-border business and world-wide private banking. The verdict for the trial (which began on October 14), was quickly reached in less than an hour and a half of deliberation. According to a news report, Weil’s attorney told the jury that Weil was not culpable because, “There’s no evidence in this case that Mr. Weil knew and much less participated in activities by low-level bankers who were violating the bank’s own policies.” In response, a former DOJ tax division assistant attorney general, Nathan Hochman, was quoted after the verdict stating, “The verdict shows you the difficulty of going after senior management who can at times blame the bank’s customers and lower-level employees for the bank’s mistakes.” Prosecutors also failed to show that “a single overall conspiracy” existed under the law.

Weil was the highest-ranking foreign banker to be charged by the US during its lengthy probe of offshore tax evasion cases. The failure by the IRS and DOJ to obtain a conviction in this case represents a significant setback as they have been very successful in prosecuting such cases (and UBS itself had previously paid a $780 million fine in 2009 and admitted to assisting clients evade US taxes in exchange for non-prosecution).

The jury verdict in Weil’s case comes on the heels of another case in which a retired senior vice president at the Los Angeles branch of a bank headquartered in Tel Aviv, Israel Mizrahi Tefahot Bank Ltd., Shokrollah Baravarian, was acquitted in a federal court of charges of conspiring to defraud the U.S. government and of helping clients prepare false tax returns. Baravarian was alleged to have conspired to conceal the existence of undeclared offshore accounts owned and controlled by U.S. customers by opening them under pseudonyms, code names and the names of nominee entities set up in the British Virgin Islands and the island of Nevis. Like Weil, he also would have faced a potential maximum prison term of five years and a maximum fine of $250,000, if convicted.

Contact Sherayzen Law Office for Help with Your Offshore-Related US Tax Compliance Issues

As can be seen from the two acquittals highlighted above, legal challenges to the IRS and DOJ in offshore tax cases can be successful. Certain US persons who reported foreign accounts through the OVDP may also find that they wish to challenge their FBAR determinations in court. If you have any questions regarding OVDP-related litigation or compliance, please contact our experienced tax practice at Sherayzen Law Office, Ltd.

Official Treasury Currency Conversion Rates of December 31, 2013 – 2013 FBAR Conversion Rates

Every year, the U.S. Department of Treasure publishes its official currency conversion rates (they are called “Treasury’s Financial Management Service rates”); I will refer to the “FBAR Conversion Rates”. Recently, the Treasury Department published the FBAR Conversion rates for December 31, 2013. While there are other good reasons for the existence of these rates, the 2013 FBAR Conversion Rates are especially important for persons who are required to file the FBARs.

The latest (October 2013) FBAR instructions require the use of Treasury’s Financial Management Service rates, if available, to determine the maximum value of a foreign bank account. In particular, the FBAR instructions state:

In the case of non-United States currency, convert the maximum account value for each account into United States dollars. Convert foreign currency by using the Treasury’s Financial Management Service rate (this rate may be found at www.fms.treas.gov) from the last day of the calendar year. If no Treasury Financial Management Service rate is available, use another verifiable exchange rate and provide the source of that rate. In valuing currency of a country that uses multiple exchange rates, use the rate that would apply if the currency in the account were converted into United States dollars on the last day of the calendar year.

For this reason, the international tax attorneys take their time to compile these rates with all updates. For your convenience, Sherayzen Law Office provides a table of the official  2013 FBAR Conversion Rates below (keep in mind, you still need to refer to the official website for any updates).

Country – Currency

Foreign Currency to $1.00

AFGHANISTAN – AFGHANI

56.0000

ALBANIA – LEK

101.7000

ALGERIA – DINAR

78.0250

ANGOLA – KWANZA

95.0000

ANTIGUA – BARBUDA – E. CARIBBEAN DOLLAR

2.7000

ARGENTINA – PESO

6.5180

ARMENIA – DRAM

404.0000

AUSTRALIA – DOLLAR

1.1200

AUSTRIA – EURO

0.7260

AZERBAIJAN – NEW MANAT

0.8000

BAHAMAS – DOLLAR

1.0000

BAHRAIN – DINAR

0.3770

BANGLADESH – TAKA

79.0000

BARBADOS – DOLLAR

2.0200

BELARUS – RUBLE

9510.0000

BELGIUM – EURO

0.7260

BELIZE – DOLLAR

2.0000

BENIN – CFA FRANC

475.0000

BERMUDA – DOLLAR

1.0000

BOLIVIA – BOLIVIANO

6.8600

BOSNIA-HERCEGOVINA MARKA

1.4210

BOTSWANA – PULA

8.7490

BRAZIL – REAL

2.3620

BRUNEI – DOLLAR

1.2540

BULGARIA – LEV

1.4210

BURKINA FASO – CFA FRANC

475.0000

BURMA – KYAT

980.0000

BURUNDI – FRANC

1540.0000

CAMBODIA (KHMER) – RIEL

4103.0000

CAMEROON – CFA FRANC

476.5400

CANADA – DOLLAR

1.0640

CAPE VERDE – ESCUDO

80.3030

CAYMAN ISLANDS – DOLLAR

0.8200

CENTRAL AFRICAN REPUBLIC – CFA FRANC

475.0000

CHAD – CFA FRANC

476.5400

CHILE – PESO

525.3200

CHINA – RENMINBI

6.0540

COLOMBIA – PESO

1924.9800

COMOROS – FRANC

361.3500

CONGO – CFA FRANC

475.0000

CONGO, DEM. REP – CONGOLESE FRANC

920.0000

COSTA RICA – COLON

495.2000

COTE D’IVOIRE – CFA FRANC

475.0000

CROATIA – KUNA

5.4600

CUBA-PESO

1.0000

CYPRUS – EURO

0.7260

CZECH – KORUNA

19.4570

DENMARK – KRONE

5.4190

DJIBOUTI – FRANC

177.0000

DOMINICAN REPUBLIC – PESO

42.6500

ECAUDOR – DOLARES

1.0000

EGYPT – POUND

6.9480

EL SALVADOR – DOLARES

1.0000

EQUATORIAL GUINEA – CFA FRANC

476.5400

ERITREA – NAKFA

15.0000

ESTONIA – EURO

0.7260

ETHIOPIA – BIRR

19.0600

EURO ZONE – EURO

0.7260

FIJI – DOLLAR

1.8640

FINLAND-EURO

0.7260

FRANCE-EURO

0.7260

GABON – CFA FRANC

476.5400

GAMBIA – DALASI

39.0000

GEORGIA – LARI

1.7400

GERMANY FRG – EURO

0.7260

GHANA – CEDI

2.3500

GREECE – EURO

0.7260

GRENADA – EAST CARIBBEAN DOLLAR

2.7000

GUATEMALA – QUENTZAL

7.8410

GUINEA – FRANC

7006.0000

GUINEA BISSAU – CFA FRANC

475.0000

GUYANA – DOLLAR

202.0000

HAITI – GOURDE

43.5500

HONDURAS – LEMPIRA

20.4200

HONG KONG – DOLLAR

7.7530

HUNGARY – FORINT

215.7300

ICELAND – KRONA

115.0300

INDIA – RUPEE

61.5000

INDONESIA – RUPIAH

12100.0000

IRAN – RIAL

8229.0000

IRAQ – DINAR

1166.0000

IRELAND-EURO

0.7260

ISRAEL-SHEKEL

3.4690

ITALY-EURO

0.7260

JAMAICA – DOLLAR

104.0000

JAPAN – YEN

105.0100

JERUSALEM-SHEKEL

3.4690

JORDAN – DINAR

0.7080

KAZAKHSTAN – TENGE

153.6000

KENYA – SHILLING

86.4000

KOREA – WON

1055.2500

KUWAIT – DINAR

0.2820

KYRGYZSTAN – SOM

49.4000

LAOS – KIP

8006.0000

LATVIA – LATS

0.5080

LEBANON – POUND

1500.0000

LESOTHO – SOUTH AFRICAN RAND

10.4800

LIBERIA – U.S. DOLLAR

79.0100

LIBYA-DINAR

1.2290

LITHUANIA – LITAS

2.5080

LUXEMBOURG-EURO

0.7260

MACAO – MOP

8.0000

MACEDONIA FYROM – DENAR

>43.4000

MADAGASCAR-ARIA

2236.0100

MALAWI – KWACHA

448.0000

MALAYSIA – RINGGIT

3.2770

MALI – CFA FRANC

475.0000

MALTA-EURO

0.7260

MARSHALLS ISLANDS – DOLLAR

1.0000

MARTINIQUE-EURO

0.7260

MAURITANIA – OUGUIYA

295.0000

MAURITIUS – RUPEE

29.9500

MEXICO – NEW PESO

13.0890

MICRONESIA – DOLLAR

1.0000

MOLDOVA – LEU

12.8950

MONGOLIA – TUGRIK

1654.1000

MONTENEGRO-EURO

0.7260

MOROCCO – DIRHAM

8.1470

MOZAMBIQUE – METICAL

29.8000

NAMIBIA – DOLLAR

10.4800

NEPAL – RUPEE

98.8000

NETHERLANDS – EURO

0.7260

NETHERLANDS ANTILLES – GUILDER

1.7800

NEW ZEALAND – DOLLAR

1.2160

NICARAGUA – CORDOBA

25.3300

NIGER – CFA FRANC

475.0000

NIGERIA – NAIRA

159.7000

NORWAY – KRONE

6.0830

OMAN – RIAL

0.3850

PAKISTAN – RUPEE

105.1600

PALAU-DOLLAR

1.0000

PANAMA – BALBOA

1.0000

PAPUA NEW GUINEA – KINA

2.3530

PARAGUAY – GUARANI

4585.4400

PERU – NUEVO SOL

2.7900

PHILIPPINES – PESO

44.3800

POLAND – ZLOTY

3.0140

PORTUGAL-EURO

0.7260

QATAR – RIYAL

3.6410

ROMANIA – LEU

3.2500

RUSSIA – RUBLE

32.8640

RWANDA – FRANC

665.6900

SAO TOME & PRINCIPE – DOBRAS

17736.4360

SAUDI ARABIA – RIYAL

3.7500

SENEGAL – CFA FRANC

475.0000

SERBIA-DINAR

83.1300

SEYCHELLES – RUPEE

11.9420

SIERRA LEONE – LEONE

4340.0000

SINGAPORE – DOLLAR

1.2630

SLOVAK REPUBLIC – EURO

0.7260

SLOVENIA – EURO

0.7260

SOLOMON ISLANDS – DOLLAR

7.0320

SOUTH AFRICA – RAND

10.4800

SOUTH SUDANESE – POUND

3.0000

SPAIN – EURO

0.7260

SRI LANKA – RUPEE

130.7500

ST LUCIA – EC DOLLAR

2.7000

SUDAN – SUDANESE POUND

6.1000

SURINAME – GUILDER

3.3500

SWAZILAND – LILANGENI

10.4800

SWEDEN – KRONA

6.4140

SWITZERLAND – FRANC

0.8910

SYRIA – POUND

141.3700

TAIWAN – DOLLAR

29.8150

TAJIKISTAN – SOMONI

4.7700

TANZANIA – SHILLING

1585.0000

THAILAND – BAHT

32.7400

TIMOR – LESTE DILI

1.0000

TOGO – CFA FRANC

475.0000

TONGA – PA’ANGA

1.7420

TRINIDAD & TOBAGO – DOLLAR

6.3800

TUNISIA – DINAR

1.6430

TURKEY – LIRA

2.1360

TURKMENISTAN – MANAT

2.8430

UGANDA – SHILLING

2520.0000

UKRAINE – HRYVNIA

8.2300

UNITED ARAB EMIRATES – DIRHAM

3.6730

UNITED KINGDOM – POUND STERLING

0.6050

URUGUAY – PESO

21.1000

UZBEKISTAN – SOM

2237.0000

VANUATU – VATU

95.3600

VENEZUELA – BOLIVAR

6.3000

VIETNAM – DONG

21100.0000

WESTERN SAMOA – TALA

2.2590

YEMEN – RIAL

214.5000

ZAMBIA – NEW KWACHA

5.5000

ZAMBIA – KWACHA

5455.0000

ZIMBABWE – DOLLAR

1.0000

FATCA Online Registration System – FATCA Lawyer Minneapolis

On August 22, 2013, the Internal Revenue Service announced the opening of a new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act (FATCA).

Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information. Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.

The registration system, designed to enable secure account management, is a web-based application with around-the-clock availability.

Within a secure environment, the new registration system enables financial institutions to:

•establish online accounts;
•customize home pages to manage accounts;
•designate points of contact to handle registrations;
•oversee member and/or branch information; and
•receive automatic notifications of status changes.

Financial institutions are encouraged to become familiar with the system, create their online accounts and begin submitting their information. Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.

As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.

The IRS will electronically post the first IRS Foreign Financial Institution (FFI) List in June of 2014, and will update the list monthly. To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.

FBAR Lawyers Minneapolis

Sherayzen Law Office is a premier international law firm that specializes in FBAR compliance among other international tax issues. The firm is headquartered in Minneapolis, but it serves clients throughout the United States and overseas.

FinCEN Form 114 formerly Form TD F 90-22.1, the Report of Foreign Bank and Financial Accounts (commonly known as the “FBAR”), is not the most complex form in the Internal Revenue Code, but it is definitely one of the most severe forms when it comes to penalties. A lot of U.S. taxpayers either do not know about this form, do not realize how important it is, or they already realized that they should have filed the FBAR earlier and do not know how to get out of the vicious cycle of non-compliance.

Helping these taxpayers is our specialty. Our international tax firm is highly specialized and experienced in the FBAR matters, including FBAR voluntary disclosure. We will analyze your case thoroughly, determine what your FBAR liability is (because this is not a straightforward matter and there are a lot of factors that influence your potential FBAR penalties) and identify your voluntary disclosure options.

Once you have made your choice with respect to your voluntary disclosure, we will proceed with implementing your customized case strategy. Attorney Eugene Sherayzen will personally be working with you throughout the case; we will prepare all of the required documentation (including any tax forms and the necessary legal briefs), submit all documentation to the IRS and rigorously represent your interests before the IRS throughout the voluntary disclosure process.

Contact Sherayzen Law Office for Help with FBARs

If you have any undisclosed foreign financial accounts, contact Sherayzen Law Office as soon as possible. The earlier you contact us, the sooner we can schedule a consultation to review your case. It is highly important that you contact Sherayzen Law Office before the IRS begins its investigation of your undisclosed accounts, because such investigations may preclude the availability of some of the voluntary disclosure options.

FBAR Criminal Penalties

handcuffs

Potentially, a person who willfully fails to file an FBAR or files a false FBAR may be subject to:

  • A prison term of up to 10 years
  • Criminal penalties of up to $500,000
  • or both

When it comes to penalties, FinCEN Form 114 formerly Form TD F 90-22.1, Report on Foreign Bank and Financial Accounts (commonly known as FBAR), is one of the most severe forms ever issued by the U.S. Department of the Treasury.

In addition to a rich arsenal of civil penalties, the FBAR is also armed with criminal penalties that U.S. taxpayers may face in cases of willful non-compliance with the FBAR regulations.  The two most common cases for criminal prosecution are willful failure to file an FBAR and willful filing a false FBAR, especially when combined with potential tax evasion.

The authority for the severe criminal penalties can be found in 31 U.S.C. § 5322.  This means that, potentially, a person who willfully fails to file an FBAR or files a false FBAR may be subject to a prison term of up to 10 years, criminal penalties of up to $500,000 or both potentially, a person who willfully fails to file an FBAR or files a false FBAR may be subject to a prison term of up to 10 years, criminal penalties of up to $500,000 or both.

With the mountain of information that the IRS recently accumulated as a result of the 2009 OVDP, 2011 OVDI and, now, 2012 OVDP voluntary disclosure programs, one should expect a dramatic rise in FBAR enforcement. This, of course, means that we are likely to witness the equivalent rise in FBAR audits and criminal prosecutions.

Contact Sherayzen Law Office for FBAR Help

If you have undisclosed foreign accounts and you are subject to the FBAR requirements, contact Sherayzen Law Office immediately.  Our experienced international tax firm will thoroughly review your case, analyze the available options in a responsible and creative way, create a case plan, draft and complete the necessary legal and tax documents and forms, and rigorously represent your case before the IRS.

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