Are you aware of the potentially severe implications of failing to report your foreign bank and financial accounts to the U.S. Department of Treasury? Regulations mandate that U.S. persons with foreign bank and financial accounts exceeding $10,000 in aggregate value must file the FinCEN Report 114, or FBAR, annually. U.S. taxpayers must be aware of the requirements for filing these reports to prevent substantial penalties and unintentional non-compliance. Recent cases involving FBAR penalty assessments serve as a reminder of the significant financial and legal repercussions that U.S. taxpayers face for non-compliance.
One such case involved Alexandru Bittner, a dual citizen of Romania and the United States, whose failure to file his foreign bank accounts led to a Supreme Court hearing. The outcome of this case established that the penalty of up to $10,000 for non-willful failure to file an FBAR accrues per report, not per account.
Similarly, Timberly Hughes, who operated a winery in New Zealand, failed to report her financial interests in New Zealand bank accounts for the years 2010 through 2013. This resulted in the United States District Court for the Northern District of California entering a final judgment against Hughes, imposing penalties of approximately $238,000 and $105,000 in interest and fees to the U.S. government.
Another case involved Stephen Kerr from Arizona, who failed to report his foreign bank accounts in Switzerland. As a result, he owes approximately $2.7 million in recalculated penalties and interest to the IRS. The court’s ruling on the IRS’s miscalculated penalties could lead to a reopening of the case for a final judgment.
These cases underscore the severity of FBAR penalties and the importance of taking compliance seriously. U.S. taxpayers need to file accurately and timely and should seek help from experts who specialize in foreign tax compliance. Keeping abreast of IRS and FinCEN guidelines is essential to maintaining compliance while preventing any inadvertent non-compliance.
Author: Nina Fatima Argayoso | [email protected]
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