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Tax Notes Quotes Zhanna Ziering on Potential Pivotal Consequences of FBAR Order

May 21, 2018, Tax Notes

A district court’s terse interpretation of U.S. foreign bank account reporting laws, outlined in an order scarcely over six pages, could shake the penalty regime to its very foundation.

Seeking penalties against taxpayer Dominique Colliot of nearly $750,000 for willful nonreporting of FBARs from 2007 and 2008, as well as smaller penalties for 2009 to 2010, the IRS sought to reduce the amounts to judgment. . . . The implications for other taxpayers accused of willfully failing to file FBARs could be huge if the district court’s rationale is widely adopted. Willful FBAR penalties based on account value frequently run well into the millions.

. . .

Practitioners were quick to acknowledge the potential groundbreaking consequences of the Colliot order.

Zhanna Ziering of Caplin & Drysdale argued that the decision is an important win for taxpayers since it puts a hard cap on statutory FBAR penalties. “It will change the dynamics in the FBAR penalty disputes, as the cap in most cases — depending on the number of accounts — will be more generous than the cap under the May 2015 guidance,” Ziering said. “Given the fact that this decision may have a tremendous impact on how the IRS views and assesses FBAR penalties, I anticipate this decision being appealed or the regulation being amended or revoked in the near future to return to the current status quo.”

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

Excerpt taken from the article “Court’s Interpretation of FBAR Could Turn Regime on Its Head” by Andrew Velarde for Tax Notes.

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