From the Tax Law Offices of David W. Klasing - Court Upholds $800,000 FBAR Penalty Against Woman Who Concealed Swiss Bank Account
IRVINE, Calif., Nov. 20, 2019 /PRNewswire/ -- Mindy P. Norman was penalized in excess of $800,000 after having been found willfully concealing a Swiss bank account that was active during 2007. Norman attempted to contest the penalty, an effort she began in 2014. In the case’s most recent development, the United States Court of Federal Claims, rejected Norman’s arguments against her FBAR penalties, siding with the Internal Revenue Service (IRS) and upholding the original penalty.
In order for Norman’s case to make sense, one must have some background knowledge of the U.S. government’s foreign account reporting requirements, which are aggressively enforced by the IRS. To combat overseas tax evasion, the IRS requires U.S. taxpayers to report offshore investments, businesses and financial accounts that meet certain criteria. These requirements extend to U.S. citizens, resident aliens (such as green card holders), and in some instances, even non-residents. American expats, U.S. retirees who are living abroad, and dual citizens can thus be impacted.
Both individuals and business entities may be subject to offshore reporting requirements. The Foreign Bank Account Report ( FBAR ) filing requirement, which is established by the Bank Secrecy Act (BSA). U.S. citizens, resident aliens, domestic trusts, and domestic businesses must file an FBAR, also called FinCEN Form 114, if they have reportable offshore accounts or assets with an aggregate value exceeding $10,000. See Internal Revenue Manual (IRM) 4.26.16, here, for a comprehensive FBAR overview.
In 2013, the IRS assessed an FBAR penalty of more than $803,000, citing the taxpayer’s willful failure to report the offshore account, which violates 31 U.S. Code § 5314 (pertaining to “records and reports on foreign financial agency transactions”). This figure represents the willful FBAR penalty, which, at up to 50% of the taxpayer’s unreported account balance, dwarfs the $10,000 maximum non-willful penalty. Norman’s conduct was determined to be willful based on a string of damaging details, which, according to court records, included “repeated and admitted lack of care in (1) filing inaccurate official tax documents without any review; (2) signing foreign banking documents without any review; and (3) later providing false statements both to the IRS and to the court.”
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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, email@example.com
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