According to evidence introduced at trial, the balance of the bank account during each of the years at issue exceeded $1.4 million, and the jury found Zwerner should be liable for penalties for 2004 through 2006. Zwerner faces a maximum 50 percent penalty of the balance in his unreported bank account for each of the three years. The jury found that Zwerner’s failure to report the account was not willful for 2007, and the court will determine the final amount of the judgment after further proceedings in June 2014.
The evidence at trial showed that Zwerner opened an account in Switzerland in the1960s, which he maintained in the name of two different foundations he created.
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The IRS is reviewing amended returns "Quiet Disclosures" and could select any amended return for examination.
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The IRS has identified, and will continue to identify, amended tax returns reporting increases in income.
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The IRS will closely review these returns to determine whether enforcement action is appropriate.
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If a return is selected for examination, the 27.5 percent offshore penalty would not be available.
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When criminal behavior is evident and the disclosure does not meet the requirements of a voluntary disclosure under IRM 9.5.11.9, the IRS may recommend criminal prosecution to the Department of Justice."
Many have been wondering whether the IRS will pursue examinations of "Quiet Disclosures" of taxpayers residing in the United States in some manner. Now these Taxpayer's have their answer: They Will!
As Mr. Zwerner discovered a incomplete attempt to make a voluntary disclosure on an anonymous basis will not protect you from the assertion of the 50% intentional failure to file penalties. You are either in the OVDP program or you are not!
In a blog post by by CHARLES P. RETTIG, Jury Determines 150-Percent FBAR Penalty and U.S. Seeks FBAR Related Forfeiture of $12 Million! he comments that the government assessed civil FBAR penalties equivalent to 50 percent of the highest account balance for each of tax year 2004, 2005, 2006 and 2007, aggregating $3,488,609.33 for an account that appears to have had a high balance of $1,691,054 during the relevant time period!
Essentially, the assessed FBAR penalties upheld by the jury aggregate $2,241,809 on an off-shore account that had an apparent high balance of $1,691,054 during the years at issue. This is a significant win for the government in their efforts to encourage certain US persons having undisclosed interests in foreign financial accounts to come into compliance with the applicable filing and reporting requirements.
U.S. taxpayers should carefully review the underlying factual scenario set forth in C.R. Zwerner before making any decision to pursue any form of voluntary disclosure regarding previously undisclosed interests in a foreign financial account. Many taxpayers are considering opting out of the OVDP and some might reconsider in light of the jury verdict in Zwerner for multiple FBAR penalties.
Various taxpayers who have opted out of the OVDP have already received notices asserting multiple FBAR penalties for the years involved.
Read more at: Tax Times blog
