In a recent Tax Notes article by Andrew Velarde entitled “Another District Court Weighs in Favor of FBAR Survivability, Caroline Ciraolo reacted to recent rulings on whether penalties for willful failure to file foreign bank account reports can survive the death of the nonfiler. As Caroline noted, the court’s remedial determination ignores a decade of practice in how the civil FBAR penalty has been imposed.
Excerpts from the article are below:
Caroline Ciraolo of Kostelanetz & Fink LLP said the court’s remedial determination ignores a decade of practice in how the civil FBAR penalty has been imposed. This includes assessments based on a failure to report signatory authority over a foreign account owned and reported by another U.S. person, signatures on tax returns without reading “the fine print on Schedule B,” and reliance on improper reporting advice by tax professionals, she said.
“The government has asserted, and the courts have imposed, nearly strict liability for civil FBAR penalties and have assessed and affirmed amounts that far exceed any reasonable estimate of harm to the government in those civil cases,” Ciraolo said. “In this environment, while civil FBAR penalties serve an important role in the enforcement of the reporting obligations under the Bank Secrecy Act, to suggest that they are not punitive in nature rings hollow.”
