U.S. Seeks Court for Non-Willful FBAR Enforcement: In a recent 2019 case filing, the U.S. seeks to enforce a $32,000 penalty against a taxpayer residing in Bermuda, and reduce the assessed FBAR penalties to judgment. Even though the penalties are non-willful and the Taxpayer seemingly tried to submit to offshore voluntary disclosure, the U.S Government and is still moving forward, full steam ahead in enforcing the IRS FBAR Penalties.
U.S. vs. Priscilla Brown (Case No.: 1:19-cv-3703)
Defendant has been residing in Bermuda since 1993. She maintained bank accounts in Bermuda. More specifically, she maintained bank accounts and investment accounts — including a money market and savings account — at Bank of N.T. Butterfield and Son Limited.
Taxpayer Entered Offshore Disclosure in 2014 & Filed Delinquent FBARs in 2017
In reviewing the complaint on file, the timing and sequence is a bit off. From the complaint, it is unclear if defendant entered OVDP or just submitted a Form 14457 in 11/2014. She did not file the delinquent FBARs until later in mid-2017, and she was only assessed non-willful penalties.
*2014 is the same year the stand-alone Streamlined Procedures took effect.
As provided by the complaint:
“On or about November 11, 2014, the Defendant voluntarily disclosed to the U.S. Internal Revenue Service (the “IRS”) via an offshore voluntary disclosure letter (the “Form 14457”) that she had offshore bank accounts whose aggregate values totaled between $100,000.00 and $1,000,000.00 between the calendar years of 2007 through 2014.
In her Form 14457, the Defendant voluntarily disclosed that she owned and/or controlled three (3) relevant foreign accounts (a savings account (the “Savings Account”), a checking account (the “Checking Account”), and a money market account (the “Money Market Account”)) at a foreign bank, Bank of N.T. Butterfield and Son Limited (“Butterfield”), in Bermuda.”
The IRS Sought Non-Willful Penalties Only
The IRS has 6 years to enforce FBAR compliance. Here, the defendant was hit for penalties in 2011-2013.
As provided by the complaint:
“The Defendant failed to timely file a FBAR for calendar years 2011, 2012, and 2013, despite her obligation to do so.
On the Assessment Date of June 5, 2018, a delegate of the Secretary of Treasury assessed FBAR penalties against the Defendant in the amount of $30,000.00 (the “Assessed FBAR Penalties”). The Assessed FBAR Penalties are proper and fall within the civil penalty limits imposed by 31 U.S.C. § 5321(a)(5)(B)(i).
Interest and penalties have accrued on the FBAR penalties since the assessment date and, as of July 3, 2019, the total amount owed was $32,261.09.
Therefore, the Defendant is liable for $32,261.09 as of July 3, 2019, pursuant to 31 U.S.C. § 5321(a)(5) and 31 U.S.C. § 3717, plus further interest, penalties, and statutory additions to those amounts accruing after July 3, 2019 to the date of payment pursuant to 31 U.S.C. § 3717.”
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