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Zhanna Ziering Comments on Recent FBAR Penalty Case in Tax Notes
Caplin & Drysdale

Zhanna Ziering Comments on Recent FBAR Penalty Case in Tax Notes

Date: 5/19/2020

A district court has rejected the premise that foreign bank account reporting penalties are subject to the Eighth Amendment’s excessive fines clause, in one of the strongest rebukes yet in FBAR litigation. 

. . .

“The court’s determination seems to summarily rest on an assumption that the FBAR penalty is essentially a tax penalty and should be treated likewise,” Zhanna Ziering of Caplin & Drysdale said, pointing to the court’s citation of the Bank Secrecy Act’s legislative history to support its remedial finding. “Notably, at [their] inception, the FBAR willful penalties were significantly smaller and thus may have contained more of a remedial purpose. However, the Congress was clear that its impetus for the penalty increase in 2004 was an increase in FBAR compliance and deterrence.” 

Following changes to the statute in 2004, willful FBAR penalties were capped at the greater of $100,000 and 50 percent of the account value. Before that, the penalty was limited to the greater of $25,000 and the account balance at the time of the violation, up to a maximum of $100,000 per violation. 

For the full article, please visit Tax Notes’ website (subscription required).

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