Charles (Chuck) Rubin published an article in the blog RUBIN ON TAX, titled “FBAR Case Reversed – Nonwillful Filing Penalties Based on Number of Accounts Not Reported”. The article begins as follows:
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.
Posted by Isabella King, Associate Editor, Wealth Strategies Journal.