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Tax Notes Quotes Zhanna Ziering: FBAR Decision Shows IRS Winning on Willfulness, Practitioner Says

September 25, 2017, Tax Notes

In Bedrosian v. United States, No. 2:15-cv-05853 (E.D. Pa. 2017), issued September 20, the U.S. District Court for the Eastern District of Pennsylvania found that the government failed to prove that Arthur Bedrosian, a pharmaceutical executive, had willfully failed to list the larger of his two Swiss bank accounts at UBS AG on a 2007 FBAR, and that therefore, the increased penalty under 31 U.S.C. section 5321(b)(2) would not apply.

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Mixed Reactions

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But Zhanna A. Ziering of Caplin & Drysdale Chtd. said she thought the court found a way to apply the lower willfulness standard in a way that did not operate as de facto strict liability.

It was refreshing to see the court look beyond the facial indicia of willfulness, such as the account at UBS and quiet disclosure, to the underlying facts in context, Ziering said. It was also encouraging to see the judge acknowledge the willful nonreporting in prior years, yet analyze the 2007 filing on its own merit, she said.

Ziering said that she expects the government to strongly consider appealing the outcome in Bedrosian because the case involved many indicia of willfulness that have been sought at the examination stage. “They have a chance of success on appeal, but . . . if the Third Circuit upholds this decision, I think it’s going to create serious hazards” for the government, she said.

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

Excerpt taken from the article “FBAR Decision Shows IRS Winning on Willfulness, Practitioner Says” by Nathan J. Richman.

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