Friday, January 15, 2021

Another District Court Holds FBAR Nonwillful Civil Penalty Is Per Form Rather Than Per Account (1/15/21)

In United States v. Kaufman, 2021 U.S. Dist. LEXIS 4602 (D. Conn. Jan. 11, 2021), Tax Notes here and CourtListener here, the Court: 

  • Granted the Government summary judgment holding that the summary judgment facts precluded reasonable cause.
  • Granted Kaufman summary judgment holding that the nonwillful FBAR civil penalty was per annual form rather per account (basically $10,000 max each year for deficiencies or delinquencies on FBARs) rather than $10,000 for each account that was not or was incorrectly reported on the annual FBAR.

 The holding on reasonable cause is straight-forward.  Kaufman just had bad facts.

The holding on the nonwillful penalty being per form or per account is not so straight-forward.  The Courts – only three district court cases -- are not in agreement.  See the discussion in the Kaufman opinion.  Of the two cases agreeing with the Government position, the lead on is currently pending after oral argument in the Ninth Circuit.   United States v. Boyd, No. CV 18-803-MWF (JEMx), 2019 WL 1976472 (C.D. Cal. Apr. 23, 2019), appeal argued No. 19-55585 (9th Cir. Sept. 1, 2020).  See Two Cases Sustaining FBAR NonWillful Penalties on Per Unreported Account Basis (4/26/19), here.  The other district court case holding for the taxpayer that maximum penalty is per form is United States v. Bittner, 469 F. Supp. 3d 709 (E.D. Tex. 2020), appeal docketed No. 20-40597 (5th Cir. Sept. 11, 2020).  See District Court Holds FBAR Nonwillful Penalty Is Per Form Rather than Per Account (6/30/20), here

So, it appears to me that at this point the issue is not yet settled and, ultimately, the issue might go either way.

For another treatment of Kaufman, see Robert S. Howitz, IRS Loses Another Non-Willful FBAR Case (Tax Litigator Blog 1/14/21), here.

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