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Tuesday, December 14, 2021

FBAR Case Reversed - Nonwillful Filing Penalties Based on Number of Accounts Not Reported

Back in 2000, I wrote here about a case where a taxpayer did not report multiple foreign accounts on an FBAR. The question for the court was whether the $10,000 penalty for a nonwillful failure to file meant  $10,000 per return not filed, or $10,000 per account not reported on the return. For a multi-year failure to file, if there are a lot of accounts this could dramatically impact how large the penalties are. The court held the penalty is based on a per return not filed basis.

The 5th Circuit Court of Appeals has reversed the trial court and allowed the penalty be imposed on a per account basis, and thus vastly increased the penalties for the taxpayer.

U.S. v. Bittner, Case No. 20-40597 (5th Cir. Nov. 30, 2021)

Sunday, December 05, 2021

Broad Reading of Six Year Statute of Limitations for Subpart F Omission

Code Sec. 6501(e)(1)(C) extends the normal three-year statute of limitations on assessment to six years as to omissions of Subpart F income. In a Chief Counsel Advice, the extended six-year period was determined to apply to the entire tax liability of the corporation for that year, not just to the specific subpart F items constituting the gross income omission.

Chief Counsel Advise 202142009