A Texas court has dismissed a lawsuit against the IRS asserting that the IRS burden of proof to assess a $1.4M IRS offshore penalty had not been met. The IRS originally asserted that the plaintiff’s failure to file an FBAR for his offshore accounts, assets and investments in 2008 was “willful”, resulting in a penalty of $100,000 or 50% of the highest balance of the accumulated account balances, whichever was higher. The result: $1.4M in FBAR penalties.
The judge in the case dismissed the case stating that the plaintiff lacked the standing to file suit. In his lawsuit, the plaintiff asserted that the IRS had not met the legal “burden of proof” that his actions were willful in nature, and that the agency could not establish a “clear and convincing” evidence standard in the judgment of his actions. The court dismissed this assertion as “highly speculative.”
The failure to report offshore bank and investment accounts, assets and income is serious business and the IRS and US Justice Department have won several cases in court. If you have not fully disclosed your offshore accounts, assets and income the time to do so is now. The IRS is receiving detailed information on US taxpayers from foreign banks, investment houses and financial institutions, including the ability to tie this information directly and personally to US taxpayers.
US taxpayers have two viable options: the Offshore Voluntary Disclosure Program or OVDP, and the Streamlined Domestic/Foreign Offshore Procedures. In order to qualify for the streamlined application, the taxpayer must complete an exhaustive form in order to document a “non-willful” tax evasion conduct in the failure to disclose. This is a very high standard and many existing streamlined applications have been rejected outright or returned with “questions.”
If you have questions about the reporting of offshore assets, accounts and income, or coming into compliance with IRS FBAR reporting requirements we invite you to call 866-631-3470 for a free and substantial consultation. Avoid exposure like the $1.4M IRS Offshore penalty faced by the plaintiff in this case.