Hughes Court Splits Ruling on FBAR Willful & Non-Willfulness

Hughes Court Splits Decision on FBAR Willful & Non-Willfulness

Hughes Court Splits Decision on FBAR Willful & Non-Willfulness (California 2021)

Hughes Decision on Willful & Non-Willful FBAR Conduct (California 2021):  When it comes to FBAR willful and non-willful violations, the courts are split (although they often tend to lean in favor of the US Government if there is any evidence of reckless conduct). And, a recent case ruling in the District Court of Northern California continues the trend of reckless conduct (and split decisions). One the one hand, the Court held for some years, the Government satisfied it’s burden of willfulness for foreign accounts noncompliance — and for other years, it did not. There are several moving parts for this decision (split-decision with some years resulting non-willful penalties and other years resulting in willfulness penalties). And, while there were several facts that would seemingly remove it from the willful category — it is impossible to know for certain how a Court will rule — and in this particular case the court ruled against defendant and on behalf of the US government and found her willful for 2012 and 2013 — and for Defendant as non-willful in part (2010-2011). We will reproduce portions of the ruling for you below with summary of the key facts:

Hughes Stipulated Facts

• • • 7. Ms. Hughes was born in the state of Nevada in 1964. She has been a U.S. Citizen since birth. She presently possesses a U.S. passport.

    • 8. Ms. Hughes earned her undergraduate degree in 1986 from Gonzaga University in Spokane, Washington. She earned a Bachelor of Business Administration (B.B.A.) degree with a major in International Business and a minor in Political Science.

    • 13. By 1991, Ms. Hughes transitioned to a role as an independent contractor with Rodde McNellis and provided bookkeeping services for the firm after being trained by the  bookkeeper at Rodde McNellis.

    • 14. That same year, she started Hughes Bookkeeping Company. Her first clients included Rodde McNellis, as well as a real estate broker who shared office space with Rodde McNellis.

    • 15. Ms. Hughes grew her bookkeeping business answering part-time bookkeeping ads, and from word of mouth referrals. As a bookkeeper, she prepared the accounts payable and check registers for businesses and gathered documents necessary for tax return preparation. She would provide the client’s documents to the client’s CPA for tax return preparation.

    • 16. In 1991 she began to work with the CPA firm Seiler LLP, having been introduced to them by one of her first clients.

    • 17. In 1991 or 1992 Seiler asked Ms. Hughes to work with Claude and Louise Rosenberg to provide bookkeeping services for the family and work closely with the couple’s tax attorneys and tax people.

    • 18. Ms. Hughes would pay all of the Rosenbergs’ bills and kept track of payments in a ledger that she would submit to the Rosenbergs’ CPA at Seiler every month.

    • 19. Claude and Louise Rosenberg owned many properties through a revocable trust. The revocable trust was also a partner in 97 partnerships and had a No. of brokerage accounts. Ms. Hughes would organize and keep track of tax-related documents for each of the trust’s partnerships, including Forms K-l. Ms. Hughes also kept track of property tax statements for properties Claude and Louise Rosenberg owned through the trust. She would follow up with partnerships to obtain missing K-ls and convey the documents to the CPAs at Seiler & Co. for tax return preparation.

    • 20. As a personal bookkeeper for Claude and Louise Rosenberg, Ms. Hughes also kept track of paying personal bills, including household utilities, household help, credit card bills, and expenses related to the Rosenbergs’ children and grandchildren.

    • 21. She provided bookkeeping services for the revocable trust after the deaths of Claude Rosenberg (2008), and Louise Rosenberg (2010), and saw a significant increase in her revenue from work for the trust due to increased work in keeping each of the Rosenbergs’ four  children informed of the trust’s operations.

    • 22. The assets in the Rosenbergs’ revocable trust exceeded one billion dollars in value at the time of Louise Rosenberg’s death in 2010.

    • 23. Ms. Hughes did not prepare tax returns for the Rosenbergs, but she did prepare tax returns for her own mother, sisters, brothers and approximately three to five friends over the years. At trial, the United States acknowledged that the tax returns that Hughes prepared for others were simple, and there is no evidence that she prepared tax returns for anyone else that involved Schedule B, Schedule C, or FBAR forms. Trial Tr. Vol. II (dkt. 156) at 167:2-12.

    • 24. Ms. Hughes used TurboTax to prepare tax returns for herself and others. Prior to using TurboTax, Ms. Hughes would fill out tax returns by hand. She obtained blank copies of tax forms from the IRS by mail, and on at least one occasion, visited the Federal Building in San Francisco to pick up copies of blank tax forms to fill out by hand for her family and friends

    • 25. For the years 2010, 2011, 2012 and 2013, Ms. Hughes purchased TurboTax CDs to use for preparing her own tax returns.

Why is this Important?

The reason these facts are important is because it shows the background of the Defendant, which is that she had some knowledge regarding tax return preparation and bookkeeping  — as well as some more complicated bookkeeping involving trusts.

Tax Return Preparation

• • • 25. For the years 2010, 2011, 2012 and 2013, Ms. Hughes purchased TurboTax CDs to use for preparing her own tax returns.

    • 26. In 2001, Ms. Hughes formed Akaroa Convention Centre (2000) Limited in New Zealand. In 2003, the name of this entity was changed to Akaroa Winery Limited. Subsequently, in 2005, the name of the entity was changed to Takamatua Valley Vineyards Limited (“TVV” or “Takamatua”). From inception, Ms. Hughes has been TVV’s sole owner and director. TVV is located in Akaroa, New Zealand.

    • 27. On September 17, 2013, Ms. Hughes formed Cuba Uncorked Limited (“CU”) in New Zealand. CU operated a wine bar in Wellington, New Zealand that is now closed. CU is solely owned by Ms. Hughes.

    • 28. As sole owner of TVV and CU, Ms. Hughes had a financial interest in, and signature authority over, TVV’s and CU’s bank accounts at ANZ Bank New Zealand Limited for each of the following years…

Why is this Important?

These facts expand upon the fact that not only did the Defendant have some knowledge about tax returns an accounting, but she personally owned entities outside of the United States in New Zealand — which both conducted operations outside of the United States, as well as owned (had a financial interest in)  bank accounts abroad. Moreover, since Defendant was the only owner — she had full financial interest in the account — as well as signature authority.

Schedule B & Foreign Accounts

• • • 29. During each of the years at issue, the aggregate value of the financial accounts at ANZ Bank exceeded $10, 000 in U.S. currency, and Ms. Hughes was required to timely file an FBAR for each of the years at issue in this action.

    • 30. The TVV and CU accounts at ANZ Bank earned interest income in the total amounts of $3, 822.88, $5, 090.61, $1, 418.55, and $6, 826.62 in taxable years 2010, 2011, 2012, and 2013, respectively.

    • 31. Ms. Hughes failed to report any of the interest income for taxable years 2010 and 2011, as she failed to attach a Schedule B, Interest and Ordinary Dividends, to her Forms 1040 for taxable years 2010 and 2011.

    • 32. On her 2012 Schedule B, Ms. Hughes reported interest income from “National Bank of New Zealand” and answered “Yes” to the first question on line 7a of Part III, Foreign Accounts and Trusts (“At any time during 2012, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions.”), indicating that she had a foreign account.

    • 33. On her 2012 Schedule B, Ms. Hughes also answered “Yes” to the second question on line 7a (“If ‘Yes,’ are you required to file Form TD F 90-22.1 to report that financial interest or signature authority? See Form TD F 90-22.1 and its instructions for filing requirements and exceptions to those requirements”), indicating that she was required to file an FBAR for the 2012 reporting period; and wrote “NZ New Zealand” on line 7b (“If you are required to file Form TD F 90-22.1, enter the name of the foreign country where the financial account is located”).

    • 34. Even though she answered affirmatively that she was required to file an FBAR for 2012, and was referred to the FBAR filing requirements, Ms. Hughes did not timely file an FBAR  for the 2012 calendar year.

Why is this Important?

It is important because it tends to show that the Defendant understood that there was a requirement to file a schedule B, and she had included interest income for some years on Schedule B. In addition, Defendant marked yes on the second question as to whether or not she required an FBAR — but then apparently did not file the FBAR.

Examination & IRS Agent Determination

• • • 59. Jonathan Lauren is a revenue agent of the IRS, and has held that role since March 15, 2010. He is a certified public accountant and has a master’s degree in business administration with a focus in accounting.

    • 60. Lauren was assigned to Hughes’s case in April of 2014. He reviewed the existing paper and electronic case files when he was assigned to the case. The IRS had opened investigations (also known as audits) into both Hughes’s income tax returns and her FBAR filings.

    • 61. The IRS had initially opened an investigation into Hughes’s 2011 income tax  return, in which an auditor first contacted Hughes in 2013. The scope was later expanded to include Hughes’s Form 1040 for 2007 through 2013, failure to file Form 927 from 2001 to 2013, failure to file Form 5471 from 2001 through 2013, and failure to file FBARs from 2010 through 2013.

    • 62. At the conclusion of the FBAR investigation, the IRS proposed as its primary position a willful penalty for Hughes’s failure to file FBARs, and in the alternative, a non-willful penalty.

Why is this Important?

It is important, because it shows that for several years, Defendant had failed to file multiple different forms to disclose an interest in foreign accounts and businesses and that the noncompliance spanned multiple years.

HUGHES Held Herself Out as an Accountant

• • • 113. Hughes has not taken many accounting classes and has not been certified as an accountant. 

    • 114. In signing as a surety for TVV on bank documents, Hughes listed her occupation as an accountant.

    • 115. Following Mrs. Rosenberg’s death in July of 2010, Hughes worked with the trustee of the Rosenberg trust in the years 2010, 2011, 2012, and 2013. The trustee was an attorney. Hughes also worked with accountants at Seiler in San Francisco for her work with the trust.

    • 116. Hughes had an accountant named Mike Gibbons who died in 2009. Gibbons was not alive to help Hughes with her 2009 or 2010 taxes. Hughes did not use any CPA in the United States for her personal taxes from 2009 through 2013.

    • 117. Hughes worked with an accountant named Alison Perry for her clients’ tax returns.

    • 118. TVV is a foreign corporation, located in New Zealand. The New Zealand address Hughes previously provided to the Court in this case as her own-59 Long Bay Road, Akaroa, New Zealand-is the same address where TVV is located.

    • 119. Hughes’s Form 1040 Schedule C for 2010 listed an address for TVV as “59 Long Bay Road, Takamatua Valley, NE 94107.” Hughes testified that the “NE” and the use of her San Francisco zip code were erroneous. Hughes’s 2011 and 2012 Schedule C forms listed the same erroneous address for TVV. Hughes’s 2013 Schedule C used the same address for TVV except that “CA” replaced “NE.”

    • 120. Hughes reported taxable interest of $128 on line 8A of her 2010 Form 1040. An instruction included on line 8 instructs the taxpayer to “attach Schedule B if required.”

Why is this Important?

One key takeaway from these paragraphs is that Defendant held herself out to be an accountant. In addition, despite the fact that Defendant owned various international companies and ownership of foreign bank accounts — she did not use an accountant or CPA to prepare her own personal returns for several of those years. In addition, the IRS was suspect that the foreign corporation was being represented as having its address in California on defendant’s tax return (although the argument was floated that it may be considered a pass-through).

Willfulness & Non-Willfulness FBAR Penalty Finding

As to Non-Willfulness

• • • C. Inferences and Factual Conclusions

      • 154. There is no evidence that Hughes reviewed Schedule B at any time before she filed her 2010 and 2011 tax returns, and thus no evidence that she saw its questions about foreign bank accounts and FBAR obligations at that time.

      • 155. There is no other evidence that Hughes was aware of the FBAR filing requirement when she filed her 2010 and 2011 tax returns.

As to Willfulness

• • • 165. To assess penalties for a “willful” violation of the requirement to file an FBAR, the United States must show that: “(1) [the defendant] was a ‘U.S. Person,’ who (2) had an interest in or authority over the subject foreign accounts, which (3) had an aggregate value of $10, 000.00 or more, and (4) that [s]he willfully failed to file an FBAR Form for the accounts.” United States v. Pomerantz, No. CI6-689 MJP, 2017 WL 4418572, at *2 (W.D. Wash. Oct. 5, 2017) (citing 31 U.S.C. § 5321(a)(5); 31 C.F.R. § 1010.350). Only the final element is disputed in this case. See Def’s Post-Trial Br. (dkt. 158) at 16 (“The Defendant does not dispute that she was in fact required to file FBARs for the 2010 to 2013 years.”).

    • 166. In a civil action, the United States’ burden of proof to show a willful violation is the preponderance of the evidence. See United States v. Garrity, 304 F.Supp.3d 267, 270 (D. Conn. 2018) (“[E]very court that has answered the question . . . has held that the preponderance of the evidence standard governs suits by the government to recover civil FBAR penalties.”). That standard requires the United States to “provide evidence establishing that it is ‘more likely than not'” that the elements are satisfied. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996) (addressing the “preponderance of the evidence” standard in the separate context of showing the amount in controversy for removal).

    • 167. Most courts to consider the issue have held that, for the purpose of civil FBAR penalties, either recklessness or willful blindness can suffice to show a willful violation. E.g., United States v. Horowitz, 978 F.3d 80, 88 (4th Cir. 2020); Bedrosian v. U.S. Dep ‘t of the Treasury, Internal Revenue Serv., 912 F.3d 144, 153 (3d Cir. 2018); United States v. Williams,  489 Fed.Appx. 655, 658 (4th Cir. 2012); United States v. Flume (“Flume IF), 390 F.Supp.3d 847, 854 (S.D. Tex. 2019); United States v. Goldsmith, __F.Supp.3d__, No. 3:20-cv-00087-BEN-KSC, 2021 WL 2138520, at *15 (S.D. Cal. May 25, 2021), appeal docketed, No. 21-55793 (9th Cir.); United States v. Bohanec, 263 F.Supp.3d 881, 889 (CD. Cal. 2016).

    • 168. The cases finding recklessness to be sufficient trace that holding to the Supreme Court’s decision in Safeco Insurance Company of America v. Burr, 55 U.S. 47 (2007), a case considering the Fair Credit Reporting Act, which held that “where willfulness is a statutory condition of civil liability, we have generally taken it to cover not only knowing violations of a standard, but reckless ones as well.” 551 U.S. at 58. Recklessness, as used in Safeco, turns on “an objective standard: action entailing ‘an unjustifiably high risk of harm that is either known or so obvious that it should be known.'” Id. at 68 (quoting Farmer v. Brennan, 511 U.S. 825, 836 (1994)). A plaintiff must show that a defendant’s action was “not only a violation under a reasonable reading of the statute’s terms,” but instead that the defendant “ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Id. at 69.

    • 169. A handful of cases have held or implied that the higher standard of a defendant’s ‘”knowledge that his conduct was unlawful,’ meaning he intentionally violated ‘a known legal duty, ‘” applies equally in criminal and civil cases addressing failure to file FBARs. Pomerantz, 2017 WL 4418572, at *3 (applying this higher standard on a motion to dismiss and holding that it was satisfied, while citing cases that applied the lower recklessness standard, without addressing the discrepancy); United States v. Zwerner, No. 13-22082-CIV, 2014 WL 11878430, at *3 & n.3 (S.D. Fla. Apr. 29, 2014) (declining to resolve which standard applies, but noting that the civil and criminal statutes addressing FBARs use the same word, and that a ‘”term appearing in several places in a statutory text is generally read the same way each time it appears'” (quoting Ratzlafv. United States, 510 U.S. 135, 143 (1994))).

    • 170. As far as this Court is aware, the Ninth Circuit has not addressed the issue of whether recklessness is sufficient to show a “willful” failure to file an FBAR. See Goldsmith, 2021 WL 2138520, at *20 (“The Ninth Circuit, although recently issuing an opinion on non-  willful Section 5314 violations, see Boyd, 991 F.3d at 1078, has not yet addressed the standard for civil penalties for willful violations.”).

    • 171. Hughes does not dispute that applicable standard encompasses recklessness. See Def’s Pretrial Br. (dkt. 130) at 2 (“As several courts have held, a defendant willfully violates the FBAR requirement when she ‘either knowingly or recklessly fails to file an FBAR.”‘ (citation omitted)); Def’s Post-Trial Br. at 16.

    • 172. Particularly in the absence of argument to the contrary, this Court finds the cases applying a recklessness standard to be better reasoned and consistent with the Supreme Court’s guidance in Safeco.

    • 173. There is evidence that could perhaps support an inference that Hughes misrepresented the country in which TVV was located or the revenue it received in order to reduce her tax liability, and portions of the United States’ briefing are devoted to those issues. Assuming for the sake of argument that is so, it does not tip the scales as to the separate issue of whether Hughes’s failure to file FBARs in any particular year was intentional or reckless, as opposed to merely negligent. Even if Hughes fraudulently misrepresented other aspects of her tax returns, that does not preclude the possibility that her omission of the particular forms at issue in this case was a result of negligence rather than recklessness or willful disregard.

    • 174. Hughes’s post-trial brief includes arguments as to whether TVV should be treated as a pass-through entity, but that issue is not relevant to the question here-whether Hughes’s failure to file FBARs was willful.

    • 175. The IRS’s failure to specifically apprise Hughes of the requirement to file an FBAR before the deadline for her to do so similarly has no bearing on whether her failure was willful.

    • 176. Hughes’s testimony that she believed an exception applied simply because she had paid New Zealand taxes on her interest income, without taking any steps to determine whether that was actually one of the exceptions to the FBAR requirement, Trial Tr. Vol. II at 158:10-159:17, despite Schedule B instructing her to “[s]ee Form TD F 90-22.1 and its instructions for filing requirements and exceptions,” Ex. 14 at HUGHESPROD-000066, evinces an “unjustifiably high risk of harm that is … so obvious that it should be known, ‘” Safeco, 551 U.S. at 68. Her  testimony that she believed an exception applied is also inconsistent with her having checked the box on her 2012 return indicating that she was required to file an FBAR. See Ex. 14 at HUGHESPROD-000066.

    • 177. Hughes also suggested that she believed checking the box indicating that she was required to file an FBAR with her 2012 satisfied her obligations, and perhaps that TurboTax would take the necessary steps to include the form. This position is inconsistent with the manner in which Hughes prepared and filed her returns: using the unassisted “forms mode” of TurboTax, and printing her returns to file as hard copies. Using that method, Hughes would have been aware that she never completed an FBAR form, and that the paper return she filed did not include such a form. To the extent her testimony suggests otherwise, it is not credible. In United States v. demons, No. 8:18-CV-258-T-36SPF, 2019 WL 7482218, at *8 (M.D. Fla. Oct. 9, 2019), the Middle District of Florida denied summary judgment for the United States on the issue of willfulness where a taxpayer claimed to have inadvertently failed to file an FBAR because TurboTax did not prompt him to do so. It is not clear from that decision whether the defendant used TurboTax’s “interview mode,” where he might reasonably have expected the software to complete the necessary forms, or (like Hughes here) “forms mode,” where such an expectation would be inconsistent with the basic operation of the software. There is no indication that, like Ms. Hughes, he filed a paper tax return where the omission of a necessary form should have been obvious.

    • 178. Hughes acknowledged that if she had taken the minimal step of reading the instructions-as Schedule B instructed her to do-she “would have filed the FBARs.” Trial Tr. Vol. II at 159:19-21. There is no basis to conclude that the need to file FBARs was anything less than obvious for any reason other than her failure to read the instructions.

    • 179. Hughes relies in part on the Southern District of Texas’s decision in United States v. Flume (“Flume 7”), No. 5:16-CV-73, 2018 WL 4378161 (S.D. Tex. Aug. 22, 2018). That decision was a denial of the United States’ motion for summary judgment; it was enough that the defendant’s “self-serving testimony” that he was unaware of his obligations created a disputed issue of material fact. See Id. at *2. After a bench trial, where-as here-the court was required to determine the facts as they actually occurred, the court concluded that the defendant at least recklessly failed to file FBARs, thus satisfying the willfulness standard for civil penalties. Flume II, 390 F.Supp.3d at 857. 

    • 180. Setting aside its distinct procedural posture, the facts of Flume I are distinguishable with respect to Hughes’s tax returns in 2012 and 2013. In Flume I, the court relied on “evidence that Flume never saw the Schedule B instruction about filing an FBAR form.” 2018 WL 4378161, at *6. Here, Hughes plainly saw at least the basic instructions on the face of Schedule B, because in her 2012 return she checked the box accompanying those instructions indicating that she was required to file an FBAR. She also saw those instructions in her 2013 return, where she answered that question differently (and inaccurately).

    • 181. In the alternative, the Flume I court held that even if the defendant saw those instructions, there was evidence “he assumed he was not required to file the form because his tax-return preparer did not prepare one for him,” id, and that he “might understandably have reasoned that he did not have to file an FBAR because his preparer had determined that one of [the] exceptions applied,” id. at *9. Here, in contrast, Hughes did not engage a U.S. tax preparer for any of the years at issue. Her assertion that she believed her New Zealand accountants identified an exception, Trial Tr. Vol. II at 161:13-17, is not credible in light of her separate testimony that she did not obtain U.S. tax advice from her New Zealand accountants, or from any other accountant or lawyer for the years at issue, id. at 152:11-22.

    • 182. The Court concludes that Hughes’s failure to file FBARs with her 2012 and 2013 tax returns was at least reckless, and thus constituted “willful” violations of the filing requirement for those years.

    • 183. Some courts have held that a taxpayer’s signature on a tax return, “thereby declaring under penalty of perjury that [the taxpayer] had ‘examined this return and accompanying schedules and statements, ‘” establishes constructive notice as to the instructions on Schedule B regarding the FBAR requirement. E.g., Williams, 489 Fed.Appx. at 659; United States v. McBride, 908 F.Supp.2d 1186, 1206 (D. Utah 2012). Other decisions have rejected that view as undermining the statutory distinction between willful and non-willful violations. Flume I, 2018 WL 4378161, at *7; United States v. Schwarzbaum, __F.Supp.3d__, No. 18-CV-81147, 2020 WL 1316232, at *8 (S.D. Fla. Mar. 20, 2020). More recent decisions have disagreed with Flume I and Schwarzbaum. E.g., Goldsmith, 2021 WL 2138520, at *25-26; United States v. Gentges,  __F.Supp.3d__, No. 18-CV-7910 (KMK), 2021 WL 1222764, at *11-12 (S.D.N.Y. Mar. 31, 2021); Jones v. United States, No. SACV 19-00173 JVS (RAO), 2020 WL 4390390, at *6 (CD. Cal. May 11, 2020).

    • 184. This Court need not resolve the significance of Hughes’s signature on her returns. With respect to her 2012 and 2013 returns, there is no doubt that Hughes saw the questions about filing an FBAR, because she answered them (and in 2012, stated that she was required to file one). In 2010 and 2011, Hughes’s returns did not include Schedule B, so the certification that she “examined this return and accompanying schedules and statements” does not encompass that schedule and its admonitions about the FBAR. The United States has identified nothing in Hughes’s 2010 or 2011 returns as actually filed that, if “examined” as she certified, would have put her on notice of the FBAR requirement.

    • 185. The circumstances of Hughes’s 2010 and 2011 tax returns differ from 2012 and 2013. Unlike those later years, there is no indication that Hughes reviewed Schedule B, with its instructions regarding the FBAR requirement, in preparing her 2010 and 2011 returns or any time before she did so. In the absence of any evidence that Hughes was aware of the FBAR filing requirement when she completed her returns for those years, or that she was presented with any information that should have put her on notice of that requirement, the United States has not met its burden to show that her failure to file FBARs in those years was anything more than negligent. The United States therefore cannot assess penalties for “willful” violations for those years.

Court’s Conclusion

• • • 186. For the reasons discussed above, the Court concludes that Hughes’s failure to file FBARs for 2012 and 2013 was “willful” within the meaning of 31 U.S.C. § 5321(a)(5)(C)(i).

    • 187. For the reasons discussed above, the United States has not met its burden to show that Hughes’s failure to file FBARs for 2010 and 2011 was willful.

    • 188. The parties shall meet and confer regarding a briefing schedule for the separate issue of assessing penalties for Hughes’s violations. If the parties can agree to schedule, they shall  file a stipulation no later than October 27, 2021. If they cannot agree to a schedule, they shall file separate proposed schedules, without argument, by the same date.

Why is this Important?

At the end of the day, the court finds that while California has not definitively ruled on whether reckless conduct is sufficient to show willfulness — defendant did not object to this position and acknowledged in her filings that in many courts — reckless disregard was sufficient to show willfulness. It seems that the court is taking the position that had taxpayer taking a few additional steps in some years to determine the requirements, then the noncompliance could have been avoided and when taken in conjunction with Defendant’s background of having some accounting and tax return experience — rules that this noncompliance would be considered willful (at least in part) in the realm of FBAR Penalties.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm today for assistance.

Why is this Important?

At the end of the day, the court finds that while California has not definitively ruled on whether reckless conduct is sufficient to show willfulness — defendant did not object to this position and acknowledged in her filings that in many courts — reckless disregard was sufficient to show willfulness. It seems that the court is taking the position that had taxpayer taking a few additional steps in some years to determine the requirements, then the noncompliance could have been avoided and when taken in conjunction with Defendant’s background of having some accounting and tax return experience — rules that this noncompliance would be considered willful (at least in part) in the realm of FBAR Penalties.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm today for assistance.