Gov't May Struggle To Justify FBAR Calculations At High Court

Michael Lloyd was quoted by Law360 regarding obstacles the U.S. government is likely to face in trying to prove the $10,000 maximum penalty for a nonwillful failure to file a Report of Foreign Bank and Financial Accounts should be calculated per account as opposed to per year.

Michael told Law360 the Internal Revenue Service has issued guidance and correspondence historically that indicates differing views on whether nonwillful FBAR violations are based on the failure to file the form or the number of accounts that weren't disclosed.

"That position on the part of the IRS hasn't been consistent in the long term," Michael said.

He added that the IRS's position on nonwillful FBAR violations could discourage taxpayers that may have otherwise looked to comply with the law voluntarily. Michael expressed it is "extremely important" for the IRS to administer penalties consistently; otherwise, it risks losing taxpayer confidence in the system.

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