Tag Archives: Report of Foreign Bank and Financial Accounts

Florida Man Fined $2.2 Million For Not Filing FBAR For Swiss Bank Account Holdings

I can’t stress how important it is to keep on top of U.S. government reporting requirements for offshore assets. Joseph Ax reported on the Reuters website last night:

A Florida man must pay more than $2.2 million in civil penalties for failing to file the required forms for his Swiss bank account, a federal jury said on Wednesday.

After a trial that began May 19, the jury found Carl Zwerner liable for failing to report the account to the U.S. Treasury Department from 2004 to 2006, though it found that he does not owe a penalty for 2007, court filings show.

U.S. tax regulations require all American taxpayers with at least $10,000 in a foreign bank account to file a Report of Foreign Bank and Financial Accounts, known as a FBAR, in order to assess the proper taxes…

Regular readers of Offshore Safe Deposit Boxes should be acquainted with FBAR by now. I blogged back on April 15:

What exactly is FBAR?

According to the Internal Revenue Service website:

If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR)…

Who must file an FBAR?

The IRS specifies:

United States persons are required to file an FBAR if:

1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and

2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported…

So, $2.2 million in civil penalties for failing to file FBAR. Mr. Zwerner must have had many millions of dollars in that Swiss account to get slapped with a fine of that magnitude, right? Wrong. Ax added:

The Justice Department, which brought the lawsuit against Zwerner, sought to penalize him 50 percent of the value of the account in each of the four years he allegedly failed to file the reports.

The Swiss account, held at Dutch bank ABN AMRO, was worth about $1.5 million during the period in question, according to court documents…

$1.5 million. And a $2.2 million fine? Keep in mind that 50 percent penalty Ax noted and what I blogged in my April 15 post:

Failure to file the FBAR could result in harsh penalties. The IRS warns:

A person required to file an FBAR who fails to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation…

Ouch. I wouldn’t mess with Uncle Sam when it comes to this sort of thing. Stay tuned as I continue to blog about U.S. government reporting requirements like FBAR and Form 8938/FATCA and what they mean for offshore safe deposit box holders.

By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)

Source:

Ax, Joseph. “Florida man must pay $2.2 million penalty for Swiss bank account.” Reuters. 28 May 2014. (http://www.reuters.com/article/2014/05/29/us-usa-florida-taxavoidance-idUSKBN0E904R20140529). 29 May 2014.

Share