Courts Serve Deadly FBAR Cocktail: Easier IRS “Willful” Penalty Win

There has been debate as to the “burden of proof” that must be met by the Internal Revenue Service (IRS) in asserting that an FBAR violation was “willful”.  It appears now that enough legal authority exists giving the IRS a lower burden of proof than taxpayers had hoped. It also appears that the courts are whittling away at the meaning of “willful”, making it easier for the IRS to prove an FBAR violation was “willful”. In the FBAR context, this is very significant because those who willfully fail to file the required FBAR on a timely basis, can be assessed a penalty of up to the greater of $100,000 (as adjusted for inflation) or 50% of the balance in the unreported financial account. This post will look at two issues of particular significance in an FBAR case – the latest judicial pronouncements on the meaning of “willfulness” and what is the “burden of proof” required to prove it.   A…

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