By: Bryan C. Skarlatos & Michael Sardar
June - July 2018 Edition
Journal of Tax Practice & Procedure

Imagine a situation in which Congress passed a statute establishing civil penalties for certain conduct, including the maximum penalty that may be imposed for such conduct, and delegated enforcement of the statute to a federal agency. What if the federal agency issued a regulation stating the maximum penalty the agency would impose under the statute and then Congress later amended the statute to increase the maximum penalty the agency could impose, but the agency never changed its own self-limiting regulation? Would the agency be bound by its regulation, or could it ignore the regulation and impose the higher penalties authorized under the new statute?

By: Michael Sardar
August 2018 Edition
The CPA Journal

On March 13, the IRS announced that it will close the Offshore Voluntary Disclosure Program (OVDP), effective September 28, 2018. In the announcement, the IRS encouraged taxpayers who need to disclose noncompliant and unreported foreign accounts and assets to come forward before the September deadline. Qualifying taxpayers who have unreported foreign accounts can still use the OVDP to come into compliance while avoiding the risk of criminal prosecution and minimizing otherwise applicable civil penalties, but only until that date. As of this writing, it not yet known whether the IRS will announce a new program or initiative to replace the OVDP. 

By Michael Sardar
The CPA Journal
September 2017 Edition

Several years ago, the IRS started its successful takedown of secret Swiss banking with the use of a John Doe summons.

By Michael Sardar
The CPA Journal
July 2016 Edition

It is not often in life that one is able to hit pause, rewind, and redo something that has already happened. To many taxpayers’ surprise, however, taxes are just one such area. Knowing the various options for correcting an error on a tax filing can help mitigate the many consequences of an erroneous tax return, including the elimination of penalties.

By Bryan C. Skarlatos, Esq., and Michael Sardar, Esq.
Tax Stringer - NYSSCPA
May 2016 Edition 

Recent Developments

Over the past few weeks, a giant trove of information regarding individuals holding assets through Panamanian corporations has been leaked to the press. So far, the “Panama Papers” - as they have come to be called - have disclosed that several high-profile individuals around the world were holding foreign bank accounts and other assets through Panamanian offshore entities. Additional information and names are expected to be released as the media sifts through the large volume of now public documents. While holding an offshore entity or bank account may be legal, the implication is that at least some implicated individuals were engaged in illegal activity or failed to properly report the assets.

By Michael Sardar
The CPA Journal
March 2015 Edition

For decades, the IRS has pursued U.S. taxpayers who maintain hidden offshore income and assets. Until recently, most tax professionals would have agreed that the IRS’s success in the area of offshore tax evasion was limited at best. The IRS has greatly ramped up its offshore compliance efforts over the past eight years. For the most part, these efforts have been met with success. Yet some taxpayers continue to maintain unreported foreign assets hoping to get away with noncompliance, or hoping that they will face no repercussions when they get caught. In reality, the IRS is becoming more skilled at discovering offshore noncompliance, and it has made it clear that the price of noncompliance will go up.

By Bryan C. Skarlatos and Michael Sardar
Unreported Foreign Assets
2014-15, Volume 27, Number 1

Brian and Helena are getting divorced. Brian has a successful electronics company that sells products around the world. Several years ago, a European customer owed a lot of money to Brian’s company and Brian instructed the customer to divert part of the payment to a numbered bank account in the Channel Islands controlled by Brian. The account now has a little over one million dollars. Helena has always known about the account and now she is threatening to tell the judge, or worse, call the Internal Revenue Service, unless Brian agrees to her settlement proposal.

By Bryan C. Skarlatos and Michael Sardar
Journal of Tax Practice & Procedure
August - September 2012 Edition

 In Williams, the Fourth Circuit Court of Appeals, in an unpublished two to one decision, reversed a district court decision and held that a taxpayer’s reckless conduct satisfied the proof requirement for a willful civil FBAR penalty. The Fourth Circuit reached this conclusion after reviewing the traditional definition of willfulness, which requires an intentional violation of a known legal duty, and after discussing issues of willful blindness. The Fourth Circuit went on to stretch the concept of willful blindness so far that it equated reckless blindness with willful blindness. The Fourth Circuit’s decision is contrary to long-standing judicial precedent as well as the IRS’s own statements regarding willfulness.

By Michael Sardar
Journal of Taxation
September 2010 Edition

Form TD F 90-22.1, Report of Foreign Bank and Financial Ac­counts (FBAR), must be filed by U.S. persons to disclose ownership, signatory, or other authority over a for­eign bank, security or financial account. Harsh civil and criminal penalties can be imposed for a willful failure to file the FBAR.1 The willfulness element of both of the FBAR penalty provisions will be examined below.

By Bryan C. Skarlatos & Michael Sardar
New York University 68th Institute On Federal Taxation
May 2010 

For nearly four decades, the law has required United States taxpayers to file Reports of Foreign Bank and Financial Accounts ("FBARs") disclosing the existence of foreign bank accounts holding more than a certain amount of money. 1 However, until recently, most taxpayers and many tax professionals had no idea these reporting obligation and they were rarely enforced. That has all changed with the recent investigation of UBS and the subsequent focus on offshore financial assets. The IRS has signaled that it intends to police the FBAR reporting requirements with much more vigilance.2 The evolution of the FBAR reporting requirements from a relatively obscure form that most taxpayers and tax return preparers did not know about into one of the IRS's most significant enforcement priorities in years raises questions about when it is appropriate for the IRS to penalize taxpayers who failed to file past years' FBARs.