Court Upholds Record FBAR Penalties, Exceeding Offshore Account Balance

In the case of Carl Zwerner a $1.69 million undisclosed offshore Swiss Bank account (ABN/AMRO) cost the Florida taxpayer $3.48 million for FBAR (and other) violations (i.e. two times the account value).
The jury found Zwerner willful and imposed the FBAR 50% penalty. The Zwerner case confirms:

1. The IRS/OVDP risks (the taxpayer applied, was rejected, and apparently the evidence was used against him by the IRS).

2. For “quiet disclosures” the requirement for taxpayer to eliminate “willfulness” so the U.S. government may not prove criminal tax evasion (and civil tax fraud).

3. For “quiet disclosures” the requirement for taxpayers to amend previously filed Form 1040. Tax returns, Schedule B, Part III, Line 7, to disclose foreign bank accounts.

The Forbes article (see below) incorrectly states that the IRS/OVDP involves “no (criminal) prosecution which is refuted by the case of Ty Warner, who applied to the IRS/OVDP, was rejected (because the IRS knew of his UBS accounts) paid a $67.5 million fine and plead guilty to criminal tax evasion.

Please see 5/29/14 Forbes article, Court Upholds Record FBAR Penalties, Exceeding Offshore Account Balance.

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