Boyd vs Bittner and FBAR Noncompliance
Recently, two Appellate Court decisions from each the Fifth Circuit (Bittner) and Ninth Circuit (Boyd) came down on the issue of Non-Willful FBAR Penalties. In the Ninth Circuit (CA9) and the case of Boyd, the Court held that when an FBAR is filed untimely but accurate — then non-willful penalties will be limited to per form (per year) and not per account, per year. In other words, if a US Taxpayer failed to file an FBAR that had 15 bank accounts listed on the FinCEN Form 114 — they would still only get assessed a single penalty for that year’s FBAR Form violation. Conversely, on the other end of the spectrum, in the Fifth circuit and the case of Bittner, the Appellate Court reversed and remanded back to the District Court on the issue of non-willful FBAR Penalties. The Appeals Court in Bittner came to a different conclusion, and rather than limiting FBAR penalties to a per form basis — the appellate court held the taxpayer could be penalized per account, per form. Continuing the example above– if a Taxpayer had 15 accounts, then depending on the total value of the amount of undisclosed money (which limits the total overall penalty amount), Taxpayer could get assessed 15 penalties in that year of $10,000 (adjusts for inflation).
Boyd vs Bittner and Noncompliant FBAR Filers
More now than ever — especially with the increased enforcement compliance requirements levied by the IRS — It is important for taxpayers to be in compliance with foreign account and overseas asset reporting. The Internal Revenue Service provides various amnesty programs that assist taxpayers with safely getting into compliance.
FBAR Amnesty Programs
The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Can I Just Start Filing FBAR This Year Instead?
No, unless the current year is the first-year you had an FBAR Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
Golding & Golding International Tax Lawyers: We Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.