In what is potentially a landmark lawsuit regarding the reporting of offshore accounts and assets to the IRS through FBAR and other forms, a Swiss man has filed a lawsuit against the IRS disputing “willful” versus “non-willful” behavior. It is interesting to note that this man, Bernhard Gubser, left one account off of his FBAR in 2008.
What is at stake? The IRS’ willful vs non-willful determination for Mr. Gubser represents the difference between a $10,000 fine and a tax bill of $1.35 Million.
It is interesting to note that the IRS has determined that Mr. Gubser’s omission of one account is a “willful” attempt to evade taxes. Many US taxpayers have filed applications under the streamlined domestic offshore procedures hoping to escape heavy fines and criminal penalties. The streamlined program requires the omissions on reporting to be “non-willful.” In Mr. Gubser’s case, missing one account in one year was determined to be “willful” behavior by the IRS.
This is a significant case from many points of view:
- If you have not yet come into compliance with offshore reporting the decision of OVDP or streamlined now carries an even higher risk
- Mr. Gubser is asking the Texas Court to force the IRS to “prove intent” when making the willful vs non-willful determination. The legal burden of proving intent is a very high and difficult standard.
- The suit brings the essence of the argument to light: $10,000 or $1.35 Million is a huge spread, and that is only related to a single account.
If you have not come into compliance with offshore reporting of accounts and assets to the IRS we invite you to contact Allen Barron for a free and substantive consultaton at 866-631-3470. The financial stakes associated with FBAR decisions are significant. We can provide sound advice, counsel and supporting services to bring you into compliance while extending the protections of the attorney-client privilege.
