Yet Another Streamlined Filing Turns into a Criminal Indictment, Implicating Former CPA and Businessman

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Yet Another Streamlined Filing Turns into a Criminal Indictment, Implicating Former CPA and Businessman

A recent IRS Criminal Investigation press release announced an indictment against a businessman charged with defrauding the United States by not disclosing offshore assets, failing to report income to the IRS, and submitting a false Streamlined Filing Compliance Procedure submission in an effort to avoid penalties and criminal prosecution.  The indictment alleges that the defendant, a businessman and purported CFO of a Russian natural gas company, hid some $93 million in offshore accounts.  The defendant allegedly failed to file Foreign Bank and Financial Accounts (FBARs) and failed to file required disclosures and forms with his federal tax returns.

As readers of our Insights Blog are aware, there has been a growing trend of prosecutions growing out of ill-advised Streamlined Filings.  That trend of prosecutions underscores the absolute necessity of having all Streamlined submissions coordinated by an attorney, given the privilege and other implications, and the absolute necessity of a full and proper evaluation of the taxpayer’s qualification for the program.  CPAs and EAs should almost never head up a Streamlined Filing without an attorney and may be venturing into the area of unauthorized practice of law when evaluating willfulness case law and qualifications for the program.  DOJ has also demonstrated a focus on charging CPAs and other tax professionals who improperly assist taxpayers.

The charges at issue in the recent indictment include charges for wire fraud, failure to file FBARs, tax evasion, false statements, and false tax returns.  If convicted, he could face up to 20 years in prison for each wire fraud count and additional times for each of the other counts.

The announcement of the indictment provides additional background on the case:

According to the indictment, from 2005 to 2016, Mark Anthony Gyetvay allegedly engaged in a scheme to defraud the United States by concealing his ownership and control over substantial offshore assets and by failing to file and pay taxes on millions of dollars of income. After working as a certified public accountant (CPA) in the United States and Russia, Gyetvay allegedly became the chief financial officer of a large Russian gas company. As part of his compensation package, Gyetvay allegedly received lucrative stock options and/or stock-based compensation. Beginning in 2005, Gyetvay allegedly opened the first of two different Swiss bank accounts to hold these assets, which at one point had an aggregate value of over $93 million. Over a period of several years, Gyetvay allegedly took steps to conceal his ownership and control over the foreign accounts and associated assets, such as removing himself and making his then-wife, a Russian citizen, the beneficial owner of the accounts. Despite being a CPA, Gyetvay also allegedly did not timely file his U.S. tax returns, nor did he file all of the required Reports of Foreign Bank and Financial Accounts (FBARs) forms certain U.S. taxpayers are required to file annually that disclose their control over assets maintained in foreign bank accounts. Further, some of the tax returns he did file are allegedly false. The indictment also alleges that Gyetvay submitted a false offshore compliance filing with the IRS through the Streamlined Filing Compliance Procedures in which he attested that his prior failure to file FBARs and tax returns was non-willful.

The recent indictment is just the latest high-profile enforcement effort from IRS Criminal Investigation Division and the Department of Justice.  Taxpayers with undisclosed foreign accounts should seek qualified tax counsel to evaluate their options for mitigating or removing exposure to IRS civil penalties and, in some cases, criminal prosecution.