Summary of the IRS FBAR Post-Assessment Penalty Process
Post-assessment FBAR penalties put the taxpayers into a tough spot. The reason is because now the IRS is in the top position. In addition, the taxpayer cannot fight the FBAR penalty in tax court. Rather, the taxpayer will usually have to pay the penalty and seek a claim for refund, or be sued – and then fight the matter in court.
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Post Assessment FBAR Penalties
Post-Assessment is a when the IRS collects “already assessed penalties” It means the IRS can seek to aggressively enforce the penalties, as well as file a lawsuit in court and seek to reduce the penalty to judgment.
A few key points about post-assessment penalties:
IRS Office of Appeals is Limited in reducing penalties
Post-assessed FBAR cases in excess of $100,000 (excluding interest, penalties and administrative costs) cannot be compromised by Appeals without approval of the Department of Justice (DOJ). See 31 USC § 3711(a)(2) and 31 CFR
Appeals Can Handle Post-Assessment FBAR Penalties
The FBAR penalty case will usually be received in Appeals as a pre-assessed case. However, in certain circumstances, Appeals will also conduct post-assessment hearings to consider FBAR penalty liability and collection. Whether the penalty is pre- or post-assessed when it comes to Appeals, it is considered the same penalty and only one appeal is available.
Post-Assessment are the IRS Priority
Post-assessment FBAR penalty cases are priority cases and must be worked expeditiously. See IRM 8.11.6.9.3, FBAR Closing – Post-Assessment case.
Tax Court is Not the Proper Venue
The venues for challenging FBAR penalties are the United States District Courts and the Court of Federal Claims, not the United States Tax Court.
FBAR Post-Assessment Case Update
The recent trend in FBAR cases is for the IRS to assess penalties, and actively seek to reduce the penalties to judgment. Many courts have sided with the IRS, and agreed to issue willful penalties, either through trial or summary judgment.
Here are a list of recent cases, and a link to the Golding & Golding summary:
- U.S. v Schwarzbaum (Taxpayer’s request for Summary Judgment denied)
- U.S. v. Burga ($120mm penalty and Kovel issue)
- U.S. v. Ott (Reasonable Cause requires “substance”)
- U.S. v. Bittner ($3M “Non-Willfiul” Penalty issued)
- U.S. v. Tonnison (FBAR Enforcement Post-OVDI)
FBAR Disclosure Amnesty – Golding & Golding (Board-Certified)
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We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
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Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
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How to Hire Experienced Streamlined Counsel?
How to Hire Experienced FBAR Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
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Golding & Golding specializes in FBAR and FATCA. Contact our firm today