Certain individuals and entities are required to file a FinCEN Form 114, Report of Foreign Bank Account Report (commonly called an “FBAR”), if they have a financial interest or signature authority in a foreign bank account. The FBAR form is filed electronically on the FinCEN website. If a person or entity does not file the FBAR form, the IRS can impose civil penalties that equal or exceed 50% of the balance in the foreign accounts. In addition, the United States can bring felony criminal charges against a person who does not file the FBAR form. 31 U.S.C. § 5322. This could include going to prison and facing substantial fines.
In general, the United States has five years to start criminal proceedings in a criminal case (either through an indictment or information). 18 U.S.C. § 3282. However, there are several statutes that could suspend or extend this five-year period, and an individual might not even know if the statute of limitations has been extended.
Under 18 U.S.C. § 3292, the statute of limitations is extended if:
- There is a grand jury investigating the offense,
- Evidence of the offense is in a foreign country,
- The United States makes an official request for the evidence from the foreign country before the statute of limitations otherwise expires, and
- The United States receives an ex parte (and under seal) order from the court that § 3292 applies.
If § 3292 applies, then the criminal statute is suspended from the date of the official request until the date a final action is taken on the request (but in no case will the statute be extended more than 3 years). § 3292(b), (c). An “official request” is defined to include requests by treaty or letter rogatory. § 3292(d).
The process under § 3292 is a hidden process—outside of public view. In step (1), above, a grand jury does not disclose its activities and internal deliberations under Federal Rule of Criminal Procedure 6(e). In step (2), above, the government’s official request to a foreign country does not require notice to the individual about whom information is being requested. In step (4), above, the court order is given without notice or a hearing to the individual involved, and the court order is under seal. Thus, the target of a grand jury investigation would not know that the statute of limitations has been extended until long after an indictment.
Concerned about your foreign bank accounts and potential criminal liability? Former IRS Attorneys of Holtz, Slavett & Drabkin, APLC represent clients in criminal tax and FBAR investigations, as well as sensitive domestic and international tax examinations, employment tax cases, and difficult tax collection matters. You can reach us at (310) 550-6200 to schedule a consultation.