Skip to Main Content

Mark Allison and Christopher Rizek Quoted in Tax Notes, Offshore Plan Participants May Have FBAR Obligations

August 8, 2011, Tax Notes

Excerpt taken from article.

The Justice Department is investigating an employee welfare benefit plan whose participants may have foreign bank account reporting obligations.

The DOJ announced July 13 that it had sued Tracy L. Sunderlage, his wife, Linda Sunderlage, three related Illinois companies, and a West Indian company to block them from operating an allegedly fraudulent welfare benefit plan through the Professional Benefit Trust Multiple Employer Welfare Benefit Plan and Trust (PBT plan).

In the alleged scheme, owners of small, closely held companies made purportedly tax-deductible contributions to a welfare benefit plan. The DOJ said the money was routed to investments offshore that were held exclusively for the owners' personal use and was transferred back to them when they ceased to participate in the plan.

It is unclear whether PBT plan participants would fall under the FBAR rules, because plan documents and other relevant information are not publicly available. However, a U.S. person's ability to control the disposition of the account is generally indicative of an FBAR filing requirement. The inability to control the disposition would likely not result in an FBAR filing requirement, said Mark D. Allison of Caplin & Drysdale.

If participants have an FBAR filing obligation, they will need to act quickly to take advantage of the offshore voluntary disclosure initiative (OVDI). The OVDI offers taxpayers reduced penalties if they voluntarily disclose offshore financial accounts. (For prior coverage, see Tax Notes, Feb. 14, 2011, p. 735, Doc 2011-2714, or 2011 TNT 27-1.)

‘‘People who participated in this plan really need to talk to a tax lawyer as soon as possible,'' said Christopher S. Rizek, also of Caplin & Drysdale. He explained that filing amended returns and preparing other paperwork for submission can make participating in the OVDI a time-consuming process. Much of the filing requires technical accounting work, so it may be too late to begin a filing that will be due August 31, he said. Allison agreed but said that assuming he could gather all of the information necessary for an OVDI filing, ‘‘participation in the program would have to be strongly considered.'' If the PBT plan participants lacked knowledge of their ownership or control over the foreign accounts, potential FBAR penalties could be reduced, he said.

Click on attached pdf to read more on Offshore account holders' FBAR obligations.


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
295 Madison Avenue
12th Floor
New York, NY 10017


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
©2021 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)