Key Takeaways:
- The law regarding computation of FBAR penalties is unclear.
- The United States Supreme Court has agreed to hear a case to settle a conflict among the circuit courts.
- Until the Supreme Court case is decided, taxpayers should work to delay IRS settlement discussions unless the favorable Ninth Circuit rules apply to the penalty computation.
On June 21, the U.S. Supreme Court agreed to hear a case to decide whether penalties for non-willful Report of Foreign Bank and Financial Accounts (FBAR) compliance failures apply on a per-form or a per-account basis. The IRS has been aggressive in asserting these penalties, and it often does so on a per-account basis. The current uncertainty in this area may place some taxpayers in the unenviable position of either accepting a significant penalty or facing the prospect of drawn-out disputes with uncertain outcomes. The Court's decision is expected to bring clarity to those with offshore accounts, including so-called accidental Americans who may be late to discover their U.S. tax and FBAR filing obligations.
The United States has long sought to prevent tax evasion by requiring U.S. persons to annually report interests in or...
