Tuesday, September 6, 2022

IRS Sues Widow as PR in Federal Court for Husbands $2.3M FBAR Penalty

According to Law360An Idaho widow faces $2.3 million in penalties and interest stemming from her husband's failure to report his foreign bank accounts to the Internal Revenue Service, the U.S. alleged in a complaint filed in federal court.

Patricia Leeds is the surviving spouse of Richard Leeds, who willfully neglected to report his two Swiss bank accounts from 2006 to 2012, the U.S. said in its its complaint, filed on August 30, 2022. She is named as a defendant in her capacity as a potential successor or personal representative to her deceased husband's estate, the U.S. said.

Richard Leeds opened one account with EFG Bank in 1980, the U.S. said in its complaint, and withdrew just over $157,000 from the account between 2006 and 2009. He initially denied to the IRS that he made the withdrawals, which is evidence that he knew he had an obligation to report them, the government said.

Richard Leeds closed the account and transferred the funds in 2009 to a second EFG account, which he had opened in 1997 and put under the name
 Asian Group for International Studies and Training, a foreign corporation he created in Turks and Caicos in 1997, the government said. Richard Leeds was the beneficial owner, the "director" and the "president/secretary" of the corporation, the U.S. said. He asked EFG to hold correspondence about the account at the bank, the U.S. said.

Cash withdrawals from the second account totaled almost $485,000 from 2006 to 2012, the U.S. alleged. As with the first account, Richard Leeds denied withdrawing the money, it said. He closed the account in 2012 and transferred the funds, $2.5 million, to a domestic account, the government said.

Richard Leeds did not disclose his accounts to an accountant hired for preparing his tax returns, the U.S. said. He admitted to a foreign source of income but did not take the accountant's advice to consult a tax attorney, it said.

The IRS Accepted Richard Leeds Into Its Offshore Voluntary Disclosure Program In 2014, The U.S. Said. He Filed Reports For The Accounts But Opted Out Of The Program In 2018, It Said.

The IRS started an examination and assessed penalties of $1.5 million against him in 2018. The amount has grown to $2.3 million as of Aug. 15, it said. Richard Leeds died in 2021, according to the complaint.

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