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05.20.21 | Articles, Books & Journals

Non-Willful FBAR Penalties: A (Temporary) Reprieve for Taxpayers?

New York Law Journal

For over a dozen years, the IRS and the DOJ have targeted the use of offshore accounts to evade U.S. income taxes. Last month, in testimony before Congress, IRS Commissioner Charles P. Rettig made it clear that this crackdown on offshore tax evasion will continue unabated. While most of the attention in this area focuses on the risk of criminal prosecution and substantial financial penalties faced by taxpayers who willfully violate their FBAR obligations, some FBAR violations are due to negligence or a good faith mistake, as opposed to willful conduct. In this article, we discuss the Ninth Circuit’s recent decision in United States v. Boyd, in which a split panel rejected the IRS’s imposition of non-willful FBAR penalties on a per-account basis, and instead limited the IRS to imposing a single $10,000 penalty per year. This important decision provides a useful roadmap for practitioners representing taxpayers as additional Courts of Appeal weigh in on the scope of non-willful FBAR penalties in the coming months.

Non-Willful FBAR Penalties: A (Temporary) Reprieve for Taxpayers? (PDF | 161.66 KB)