Scott Michel Comments on FBAR Penalty Examinations

The IRS said at a recent conference that it is not presuming “willfulness” in FBAR penalty litigation.

“Obviously the IRS is trying to maintain reasonable and consistent positions as regards FBAR enforcement across the country and has a review process in place, and practitioners are highly appreciative of these efforts,” said Scott D. Michel, a member of Caplin & Drysdale, Chartered.

However, he said, “This is often not filtering down to the field.”

In training sessions over the last seven years, Michel said, some line agents and managers have heard senior officials emphasize penalizing taxpayers. He said the FBAR is an information return “that was never intended to have a relationship to taxes.”

Some agents “are acting to pursue such penalties in a wide swath of situations where it may not be appropriate,” Michel said.

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Excerpt taken from the article “IRS Won’t Presume Willful Failure to Report Foreign Accounts” by Alison Bennett for Bloomberg BNA’s Daily Tax Report.