Under 31 USC §
5314(a), every U.S. person that has a financial interest in, or signature
or other authority over, a financial account, or accounts, in a foreign country
must report the account, or accounts, to IRS annually on a FinCEN Report 114,
Report of Foreign Bank and Financial Accounts (commonly referred to as an FBAR
or FBAR form) if the aggregate value of the foreign financial accounts exceeds
$10,000 at any time during the calendar year.
One FBAR is used to report multiple foreign financial accounts.
(FBAR instructions)
The penalty for violating the FBAR requirement is set forth
in 31 USC § 5321(a)(5). The amount of the penalty depends on whether the
violation was non-willful or willful.
One district court has held that the
penalty for a non-willful FBAR violation relates to each account required to be
shown on the FBAR. Thus, IRS could impose the statutory maximum penalty of
$10,000 for each of the taxpayer's thirteen accounts that should have been
reported on one FBAR. (US v. Boyd, (DC CA 2019) 123 AFTR 2d 2019-1651).
But another district court came to the opposite conclusion. It
found that the $10,000 non-willful penalty applies only to the FBAR form
itself, not the number of accounts required to be shown on the FBAR. (US v. Bittner (DC TX 6/29/2020).
In 2010, Mr. Kaufman
had 17 foreign accounts, the balance of which, in aggregate, exceeded $10,000.
He was required to file an FBAR, but he did not do so.
A court found that his failure was non-willful, and the IRS imposed
a penalty of $170,000, i.e., $10,000 for each account.
Mr. Kaufman argued that the penalty should be capped at $10,000,
i.e., $10,000 for failure to file one FBAR.
The district court, finding the court's argument in Bittner persuasive,
found the non-willful FBAR penalty applies per form, not per account. Thus, the
penalty was capped at $10,000.
The district court found the arguments in Boyd unpersuasive.
And the court noted that the Boyd decision was not binding on
it. Him
No comments:
Post a Comment