Wednesday, August 1, 2018

Court of Federal Claims Rejects Colliot; FBAR Willful Penalty Not Limited to $100,000 (8/1/18)

In Norman v. United States (Ct. Fed. Cl. Dkt 15-872T, Order dated 7/31/18), here, the Court held Norman liable for the FBAR willful penalty.  Basically, on the merits, the Court found that Norman was willful and deceitful about her willfulness.

Perhaps more importantly for most readers of this blog, the Court rejects Colliot's holding that the FBAR willful penalty is limited to a maximum of $100,000, because the regulations had not been changed to reflect the statutory amendment increasing the maximum FBAR willful penalty.  Basically, the Court held that the statute trumps the regulation. 

The opinion is very short (9 pages, with the discussion relevant to the Colliot issue being at page 7-9).

The conclusion for the whole opinion is (p. 9):
The Court finds that Ms. Norman’s repeated and admitted lack of care in (1) filing inaccurate official tax documents without any review, (2) signing foreign banking documents without any review, and (3) later providing false sworn statements both to the IRS and to this Court, both with and without review, reaches the standard of reckless disregard for the law required to constitute a willful violation of § 5314. Contrary to Ms. Norman’s new argument in light of Colliot, Congress clearly raised the maximum civil money penalty in § 5321 to the greater of $100,000.00 or one half of the balance of the account. As such, the Court holds that Ms. Norman willfully violated U.S.C. § 5314, and that the assessment of the civil money penalty under 31 U.S.C. § 5321 in the amount of 50 percent of her account’s balance was appropriate. The Court therefore dismisses the case, and the Clerk is directed to enter judgment accordingly.
On the issue of whether the regulation caps the FBAR willful penalty after the statute's amendment, my prior blogs are (reverse chronological order):

  • Another District Court Limits IRS Authority for FBAR Willful Penalty to $100,000 (Federal Tax Crimes Blog 7/18/18), here (on the Wadhan case reaching same result as Colliot)
  • Update on Colliot Limitation on Discretion for FBAR Willful Penalty (Federal Tax Crimes Blog 7/16/18; 7/18/18), here.
  • District Court Caps IRS Authority to Assess Willful FBAR Penalty at $100,000 (Federal Tax Crimes Blog 5/19/18), here.

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