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Tax Notes Quotes Zhanna Ziering on Recent Decision on the Application of Flora Full Payment Rule in an FBAR Penalty Case

April 9, 2021, Tax Notes

In a decision that breaks from and rebukes the Third Circuit, a lower court held that the Flora full payment rule is inapplicable as a jurisdictional bar for foreign bank account reporting penalties.

In denying motions to dismiss and transfer venue, the Court of Federal Claims on April 7 held in Mendu v. United States that FBAR penalties are not internal revenue taxes and are not subject to the Flora rule, which requires a plaintiff to fully pay a tax before bringing a refund suit.

. . .

Zhanna A. Ziering of Caplin & Drysdale said she was glad to see the Court of Federal Claims take on the Flora issue for FBAR penalties. “For all the reasons cited by the court, the Flora full payment rule cannot apply to the FBAR penalty, which is assessed under Title 31,” Ziering said. “But in addition, imposing such a requirement will make it prohibitive for taxpayers to seek judicial review of the FBAR penalties.”

For the full article, please visit Tax Noteswebsite (subscription required).


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