Pillsbury Winthrop Shaw Pittman

DoJ secures verdict in excess of $2m for failure to file FBARs

By William E Bonano

On 28 May 2014, a jury in Miami issued a verdict against a taxpayer for $2.2m (£1.3m) in fees, interest and civil penalties for willfully failing to file foreign bank account reports (FBARs) for his Swiss bank accounts. The penalties amounted to 150 per cent of the maximum value of the account during the years at issue.

US citizens and resident aliens (US persons) who have an interest in, or signature authority over, financial accounts in a foreign country, such as a bank account or a securities account, are required to disclose the existence of such accounts on Schedule B, Part III, of their individual income tax returns.

Additionally, by 30 June of each tax year, US persons must disclose any foreign financial accounts in excess of $10,000 by filing an FBAR with the US Treasury. Taxpayers who fail to file their FBARs by 30 June can be assessed a penalty of up to $10,000. However, if the failure to file was wilful, the penalty increases to the greater of $100,000 or 50 per cent of the account’s balance at the time the violation occurred. This penalty is assessed each year that an FBAR was not timely filed….

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