In United States v. Ram K. Agrawal, 2020-1 USTC ¶50,105, the Eastern District of Wisconsin held that an individual was subject to a penalty and statutory additions because he failed to file a FBAR. Further, the government’s motion for summary judgment was granted.
The taxpayer self-prepared his tax returns for two tax years at issue and sought the services of certified public accountants (CPAs) to prepare his tax returns for the remaining two tax years.
According to his deposition testimony, the taxpayer did not tell the CPAs preparing his tax return of the existence of any foreign bank accounts.
The court concluded that the taxpayer did not act with ordinary business care and prudence. Additionally, the taxpayer did not make a reasonable effort to understand his FBAR reporting responsibilities. The taxpayer failed to establish an issue of material fact as to whether his failure to file his FBARs was due to reasonable cause. The taxpayer’s argument that he was elderly, spoke English as a second language and had an inexpert understanding of tax reporting requirements did not sway the court’s reasonable cause analysis.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.