District Court says FBAR Civil Penalties Capped at $100,000

A recent decision in an FBAR case (U.S. v. Colliot) in the Western District of Texas might be huge win for taxpayers who have been incorrectly assessed FBAR civil penalties under 31 U.S. Code 5321(a)(5)(C). Background In December 2016, the Internal Revenue Service (IRS) initiated a lawsuit to reduce to judgment outstanding civil penalties assessed against Colliot….The penalties were assessed for Colliot’s repeated and willful failures to timely file Form TD F 90-22.1, entitled “Report of Foreign Bank and Financial Accounts” and commonly referred to as an “FBAR,” from 2007 to 2010…For 2007, the IRS assessed penalties of $548,773 for four separate FBAR violations. Defendant filed a motion for summary judgment arguing that while 31 U.S. Code 5321(a)(5)(C) provides a maximum penalty of the greater of (i) $100,000 or (ii) 50% of the undisclosed foreign accounts, the related regulation, 31 C.F.R. § 103.57 sets a lower ceiling.…

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