By Megan L. Brackney and Luke H. Ryan
The Journal of Tax Practice & Procedure
Spring 2022
Abstract: In this article, Brackney and Ryan discuss the Internal Revenue Service’s (IRS’) ability to seize offshore assets to collect delinquent Report of Foreign Bank and Financial Accounts (FBAR) penalties.
On May 12, 2021, Thomas J. Sawyer of the U.S. Department of Justice (DOJ) Tax Division opined that the United States was likely to see a dramatic increase in repatriation orders as the IRS focuses its collection efforts on pursuing international assets. “It hinges on jurisdiction over the taxpayer or the person controlling the property,” Sawyer explained. “[O]nce we get that jurisdiction, the court has broad authority to order repatriation. … The standards are really not that demanding.”
Repatriation orders are one of the many tools available to the IRS to obtain money owed by delinquent taxpayers, and it appears the IRS is making good on Sawyer’s prediction and will use repatriation orders as the Service’s primary means of seizing assets held overseas. As discussed below, this will have the most profound effects on taxpayers with assets abroad, who refuse to pay their FBAR penalties, and over whom courts in the United States have personal jurisdiction.
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