Sunday, November 06, 2016

$100 Million FBAR Penalty - Ouch

Taxpayers who fail to file Reports of Foreign Bank and Financial Accounts (FBARs) disclosing their non-U.S. accounts can suffer a 50% penalty on the balance of the unreported accounts. In one of the largest penalties I have seen, a New York professor of business administration has been subjected to a $100 million civil FBAR penalty for failing to report a $200 million account.

Clients often enquire whether the IRS would really impose a 50% penalty - this case provides an unequivocal yes. They also ask what bad facts will bring about such a penalty. Here, the nonreporting was clearly intentional and egregious. For more facts, feel free to read the press release of the Department of Justice here.

Emeritus Professor Pleads Guilty to Conspiring to Defraud the United States and to Submitting False Expatriation Statement (DOJ Release, November 4, 2016)

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