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Zhanna Ziering Comments on FBAR Penalty Case

July 13, 2018, MLex US Tax Watch

The Colorado federal judge in the US v. Wahdan et al case has set a July 18 hearing to clarify how the litigation will proceed if she decides the Internal Revenue Service cannot impose penalties over $100,000 for willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR).

The case is being closely watched by practitioners to see if the court will follow the lead of the Texas federal judge who ruled in May that the IRS's delegated authority to impose willful FBAR penalties is capped at $100,000. The decision in the Texas case, US v. Colliot, has caused a stir in the FBAR community.

. . .

Zhanna A. Ziering, a tax litigator with Caplin & Drysdale's New York office, said it appears the judge is trying to clarify whether the Wahdans' motion was intended to dispose of the entire case or just to settle the question of whether the IRS can impose penalties exceeding $100,000 per violation.

"This case ultimately has two issues," said Ziering. "One is whether the failure to file FBARs was willful, which the Wahdans have denied. The other issue is what the penalty amounts should be."

"I think the judge wants to know if the Wahdans want a ruling on penalty amounts, and then proceed to trial on the willfulness issue," Ziering continued, "or are they saying the entire assessment was arbitrary and capricious and the whole case should be tossed."

For the full article, please visit MLex’s website (subscription required).

Excerpt taken from the article “Colorado FBAR Penalty Case Raises Procedural Questions” by Kristen Parillo for MLex US Tax Watch.

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