7 Important FBAR Penalty Court Case Rulings Show New Trends 2021

2021 Important FBAR Penalty Court Cases

Important FBAR Penalty Court Cases 2021

Seven Important FBAR Penalty Case Rulings Show a Recent Trend in Rulings in 2021 (so far): When it comes to the FBAR (Foreign Bank and Financial Account Reporting aka FinCEN Form 114) 2021 is already shaping up to be a very important year. There have been consistent rulings on both sides of the fence — and trends are beginning to form for both willful and non-willful cases. While the non-willful penalty rulings have favored Taxpayers — the willfulness case rulings have benefited the IRS — and has made it significantly easier in several circuits for the government to prove willfulness — simply by showing the Defendant acted with reckless disregard (and without having to prove intent). Let’s go through some of the non-willful cases first, and then move onto willfulness:

2021 Non-Willful FBAR Penalty Court Cases (Boyd, Giraldi and Kaufman)

2021 has been kind (so far) to non-willful Taxpayers against whom the IRS was seeking to obtain multiple non-willful FBAR violations in the same year (e.g., per violation and not “per form” penalties). Courts overall have disagreed with the US Government’s position — and have instead limited penalties to a per form basis.

Here are three (3) important cases on the issue of the per form violation standard:

Non-Willful Penalty Cases

• Boyd Per Form Ninth Circuit Court of Appeals:  United States of America v. Jane BOYD. Case No.: CV 18–803–MWF (JEMx)
• Giraldi: U.S. v. Frank Giraldi (New Jerey): Case No: 2:20-cv-02830
• Kaufman Per Form: (Connecticut) Case No: 3:18-CV-00787

2021 Non-Willful FBAR Penalty Court Case Rulings (Rum, Kimble, Kahn)

Unfortunately, Courts have been less kind to willful taxpayers and have made it easier to both prove recklessness and recover penalties.

With willfulness, there have been two (2) main issues:

• Does Reckless Disregard (no intent) suffice for Willfulness; and
• Does the Willful FBAR Regulation limit FBAR Willful Penalties to $100,000 per year. 

In 2021 several Courts have sided with the Government and have rules that:

• Reckless Disregard does suffice to establish Willful FBAR Penalties; and
• The (outdated) FBAR regulation does not limit the Willful FBAR Penalties

Willful Penalty FBAR Cases

Here are the willful FBAR penalty cases broken down by category:

Reckless Disregard FBAR Penalty Cases

• US v Rum: USCA 11 Case: 19-14464 
• Kimble (Federal Circuit): Case 1:17-cv–00421–SGB 

FBAR Regulations FBAR Penalty Case

• US v Kahn Second Circuit Appeals: No. 19-3920 (2d Cir. 2021)

Additional FBAR Penalty Case Ruling: Penalties May Survive Death

In a recent FBAR case, the Court denied Defendant’s motion to dismiss based on the argument that FBAR penalties do not survive death. The ruling was in the motion to dismiss phase and not the final judgment as of yet. And, the court was impressed by Defendant’s argument and left the door open for a different outcome later in the case.

FBAR “Penalty Surviving Death” Case

• United States v. Gill, Dkt. No. H-18-4020

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