Friday, December 16, 2016

“Willful” Fail to File FBAR Defined in a California District Court Case

“Willful” Fail to File FBAR Defined in a California District Court Case In U.S. v. Bohanec, 2016 WL 7167869, 118 AFTR 2d ¶ 2016-5537(DC CA 12/8/2016), a district court in California determined that a taxpayers' failure to timely file a Foreign Bank and Financial Accounts Report (“FBAR”) was willful. U.S. citizens with accounts outside the U.S. must disclose those accounts on an FBAR by June 30 of the year following if the amount is at least $10,000. 31 U.S.C. 5314. In Bohanec, the taxpayers stopped employing a bookkeeper or keeping any books after opening a foreign bank account. They made several misstatements under penalty of perjury when they applied (and were rejected) from participating in the Offshore Voluntary Disclosure Program (“OVDP”). The facts in Bohanec showed that the taxpayers were very deceptive and when they filed their OVDP, they did not even disclose all of their foreign accounts - leaving out accounts in Mexico and Austria while only disclosing the Swiss accounts at UBS. They also claimed the funds were all from income duly reported and on which taxes were paid but that was also untruthful. The reason the term “wilfully” is so important is that if the failure is not willful, the penalty is “only” $10,000 but if the failure to disclose is considered “willful,” the penalty goes up to the greater of $100,000 or 50% of the highest account value for the year! Bohanac ruled that “willful” does not only include knowing failure to disclose but also reckless violations of the filing requirements.

No comments:

Post a Comment