A recent case shows the perils of not following the Internal Revenue Service (IRS) and foreign bank account reporting rules carefully.
The basic rule on foreign bank accounts is that United States citizens who have an interest in or authority over a financial account in a foreign country with assets over $10,000 are required to disclose and report the foreign financial account to the United States Department of Treasury for each year the financial account exists.
The case study here which all can learn from is as follows. According to the plea agreement filed in this case, Dr. Marc Edward Mani, a Beverly Hills plastic surgeon, began to travel to Dubai in 2011 to perform plastic surgery for a foreign medical center.
In 2012, Mani opened a bank account with a financial institution based in Dubai and began depositing income he earned from abroad into this account. By February 2013, Mani’s foreign bank account held more than $400,000. However, Mani failed to file a FBAR to disclose his foreign bank account for the calendar years 2012 and 2013. The government contends that such failure to report was "wilful" and that his accountant told Dr. Mani that he needed to report the income.
After an investigation, on July 24, 2017, Dr. Mani plead guilty to one count of failing to file a foreign bank and financial account report (FBAR) for the 2013 tax year. The government, according to court filings, claimed that Dr. Mani earned nearly $1.3 million while working in Dubai over a three-year period. United States District Judge R. Gary Klausner is assigned to this case.
The government also alleged that in addition to failing to disclose his interest in his foreign bank account, Dr. Mani also failed to report on his federal income tax returns the vast majority
of the approximately $1.28 million in foreign income he earned in Dubai for the
years 2012, 2013 and 2014. Dr. Mani is scheduled to be sentenced by Judge Klausner on July 23, 2018. The
statutory maximum sentence he can receive is five years in federal prison but the federal sentencing guidelines and Judge Klausner will determine the appropriate sentence.
Physicians need to be very careful for any and all work abroad and ensure that the proper FBAR filings are made (which is separate from the income tax reporting) and that the income is reported. Work with accountants abroad and in the U.S. in such cases to avoid double taxation.
Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Physicians need to be very careful for any and all work abroad and ensure that the proper FBAR filings are made (which is separate from the income tax reporting) and that the income is reported. Work with accountants abroad and in the U.S. in such cases to avoid double taxation.
Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
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