FBAR Penalty Cases
FBAR Penalty Cases: The number of FBAR Cases and recent Federal Court Rulings on Foreign Bank Account Reporting matters is on the rise. The FBAR is the Foreign Bank and Financial Account Reporting Form. It is also referred to as FinCEN Form 114. Even though the form was developed by FinCEN (Financial Crimes Enforcement Network), FBAR penalties are investigated, assessed and enforced by the IRS. The Internal Revenue Service cannot enforce the FBAR in tax court, since it is not technically a Tax (or covered under Title 26). Rather, the IRS sues the Taxpayer in Federal Court, and oftentimes will move for Summary Judgment or Default Judgment in FBAR penalty cases.
Recent FBAR Penalty Rulings
There have been several FBAR cases over the past few years. When it comes to FBAR cases and penalties, they come in all shapes and sizes. The IRS may pursue either willful or non-willful FBAR penalties. And, if necessary, the IRS may also refer the case out to the IRS Special Agents to investigate for criminal indictment and prosecution – although this is very uncommon.
5 FBAR Penalty Cases & Foreign Account Lawsuits
Here is a summary of five (5) recent Cases. Each summary has a link to the full case summary available on our main website.
California FBAR Case (U.S. vs Burga)
FBAR cases are common in California. In a recent California FBAR Penalty case (U.S. vs. Burga), the U.S. Government filed a lawsuit against Taxpayers for willful penalties upwards of $120MM. In addition, the issue of Kovel came up again. Overall Kovel is always a risk and never advised in streamlined and offshore matters.
Texas FBAR Cases (U.S. vs. Bach)
In a recent Texas FBAR case (U.S. vs. Bach), the U.S. seeks to enforce a willful FBAR violation against a resident of Laredo Texas, who dropped out of OVDP. The taxpayer never signed the OVDP Closing Letter 906.
Florida FBAR Cases (U.S. vs. Schwarzbaum)
In one of several Florida FBAR cases (U.S. vs. Schwarzbaum) the IRS is seeking a summary judgment against Taxpayer for alleged willful violations of foreign account compliance. The judge determined that there are potential issues of material fact which may lead to a finding of willful violations.
Oregon FBAR Cases (U.S. Tonisson)
In a recent Oregon Penalty case (U.S. vs. Tonisson) against an Oregon woman, the IRS is seeking a judgment agains the taxpayer for FBAR Penalties. As in the prior case, the taxpayer entered OVDI, but did not complete program. The difference is in this case, the IRS is seeking non-willful penalties.
*Taxpayer entered OVDI before the introduction of the Stand-Alone Streamlined Program.
FBAR Case for Criminal Penalties
In FBAR Cases that are Criminal the outcome is even more serious. In a recent case U.S. vs. Birman, the U.S. pursued criminal charges. If the IRS believes a Taxpayer acted willfully and with criminal intent, the IRS may refer the case to the IRS Special Agents for investigation. If the Special Agents believe a crime was committed, the U.S. government may then pursue a criminal indictment.
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