Did the 11th Cir. Rule Willful FBAR Fines are Unconstitutional?
Contents
- 1 Did the 11th Cir. Rule Willful FBAR Fines are Unconstitutional?
- 2 Late Filing Penalties May be Reduced or Avoided
- 3 Current Year vs. Prior Year Non-Compliance
- 4 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 5 Need Help Finding an Experienced Offshore Tax Attorney?
- 6 Golding & Golding: About Our International Tax Law Firm
Did the 11th Cir. Rule Willful FBAR Fines are Unconstitutional?
Recently, there has been some misinformation spreading online making it seem that in the case of Schwarzbaum, the court ruled that willful FBAR penalties are unconstitutional — but that is not the case. In that particular case, the Court held that in certain circumstances, when the automatic $100,000 willful FBAR penalties are issued for accounts that have a very small value ($100,000 is the minimum penalty for willful FBAR violations and it adjusts for inflation), this may violate the excessive fines clause of the eighth amendment. The ruling was very limited in scope and only applied to a few of the FBAR penalties. And, while the court did remove a few hundred thousand dollars worth of willful FBAR Penalties, more than $12M+ in FBAR penalties remained. Taxpayers should be cautious of what they read online and be aware that the ruling did not hold that willful FBAR penalties are unconstitutional per se.
Late Filing Penalties May be Reduced or Avoided
For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.
Current Year vs. Prior Year Non-Compliance
Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.
Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.
Need Help Finding an Experienced Offshore Tax Attorney?
When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.
*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.
Contact our firm today for assistance.