is penalty was properly imposed whether the maximum penalty was warranted in this case whether the regulations mandate a maximum penalty of one hundred thousand dollars and whether the penalty runs afoul of the th amendment and this argument i will concentrate upon the issues of excessiveness of the penalty and wilfulness but will of course answer any questions the court has about the other issues that are presented during this what is left in this case after the  in fact in the argument in the norman case there was a question from the court about the issue of whether if you find willfulness it is proper to impose a fifty percent penalty across the board and at what issue at what time that fifty percent penalty would be  not justified and during and this case is one where i think we can talk about whether if you find that there was willfulness a fifty percent penalty was the proper penalty mrs kemble did present that variation to the court below and it was discussed there is no dispute in this case there were two accounts the swiss account which was mr mrs kimball father's account was established by mrs kimball's father as a failsafe against another holocaust mr mr people's father was very concerned having had lost his a good deal of his family in the holocaust is parents had escaped from poland just prior to the holocaust and he was concerned that it would happen again and that there would be basically running money for the family so he deposited in that account his earnings after taxes were paid and he kept the account secret he asked mrs kimball to keep the count secret he asked her husband to keep count secret and the account was in fact kept secret nothing when him from mrs campbell nothing came out then there was another account the h s b c account which was in paris that account was an account used by the kimballs extensively there was nothing secret about it they deposited money in it they took money out of it and they used  it and neither of the accounts was disclosed until mrs kimball read after her father's death after her mother's that she read in the newspaper that there was an issue with foreign accounts and as soon as she read that she voluntarily went to the i r s and disclosed the existence of these caps i think the fact that neither of the counts was disclosed is a substantial indication that there was no intent  knowledge and no intent not to disclose the count they understood that they did not have it there's not a requirement for specific intent as or like reckless disregard is a null i think that i mean that's what norman holds  over the time it was not when she at some point absolutely became aware of this caring for her father's death right and she affirmatively saw in tax returns at least on one occasion if not more were saying she had no por accounts that is correct and that was false and that was false and she also now as to that as to the account in switzerland she also did everything she could to conceal the account as her father had well so i understand that that's the point but even if that was all done in that in good faith and in pursuit of of you know what they are consider ever a goal that's breaking the law us in that she knew about this callup and for personal reasons not related to any legal misunderstanding she will paly concealed it if you all if she only had the swiss account i think that we would be in a different position but she also has the palace account and the palace account she didn't concealing anyway she didn't disclose it on the account with the up cars but aside from that her money went in from the united states to france her money was used in france the statements were sent to her it was an ad as the swiss account with those statements were found so in in that circumstance i think that there is a distinction of sheep she clearly whether she clearly didn't know that she had to disclose the account because she knew that she definitely would have put down  back that is correct and she said the reason she didn't disclose it was why she didn't read the she did say that the definition of reckless disregard your honor if that were the case then why in the world would we need the word willfully in this statute and why would there be a distinction between the ten one thousand dollars not disclosing and the willfully not disclosing i think that if that were the case well either you knew about the requirement and you didn't disclose it or you recklessly failed to learn about it quite the requirement or you didn't know about the requirement because you didn't read your tax returns all of those a willful what is the purpose of the word willfully and what is the purpose of there being a ten thousand dollars penalty i think what we know from the norman case that wilfulness includes reckless disregard i do and the court gave one example of where it might not be willful and that was when you didn't know when did you have any reason to know but if that were the case then you would say if you knowingly failed and i think that this court has substituted the word knowingly for the word willfully because in west the f or falls out on the way to the mailbox there's no way that any failure to disclose an account could be anything but willful so i think that the court his heart argues that signing a tax return with an answer that says i have no foreign accounts when that's not the case is that willful under any definition if you look at the i r s manual and i understand that it is not binding on the court but i think it is something that the court can look at the i r s manual specifically states that's not enough and there ought to be more and they gave examples of what could be more so the guy arrested said just failing to file the f r just failing to check the box that doesn't make it willful but i think that the courts have found that that does make it will fail and i think that because if that's knowingly that standard is knowingly there has to be something more when you're talking about willfully and even if you find that it was willful i think that the kind of neat junk jerk imposition of the fifty percent penalty which is the same penalty that would be would be assessed against somebody who was a money launderer and put that money in a swiss bank account for the specific purpose of hiding that the money itself and any income from the money that's the same as mrs norman who'll excuse me  wasn't touched and the other account the paris account she was in europe she was traveling extensively throughout europe she never touched that swiss account money was put in from her accounts here tax money to be used in the paris account so i think that the question of whether you could then find that to be willful even if you could find that to be willful there ought to be some differentiation between a situation like this one and a situation in which the money is hidden the purpose the money is criminally to derive the purpose of the money is criminal  and the purpose of the deposits is to conceal this money from the tax authorities and this one which i don't think there's any dispute that mrs kemble wasn't whether she should have been aware or not that she wasn't in fact aware and that her husband who is a bunch rater and who was the one that filled out a lot of these accounts and knew about this swiss account he also was not aware of the requirement because when he filled up tax returns he checked no and he had an account that he had opened in the stablished in and put money and i'm not saying that mr kimball should be penalized because i think the statute had run by that time but i think that there is there is very substantial evidence in this case that even if this is will hope it certainly was not intentional it certainly was not done for the purpose of depriving the taxing authorities of their money there was no indication and if you look at the norman face when they talked about whether this is norman's conduct was will appreciate what they said in the case but then again they went on to discuss the fact that mrs norman and we don't disagree we disagree with the facts but the fact that they found was that mrs norman had moved her money from once wi  out to the to another when she learned that they had to that she had to disclose it and that she hadn't been entirely honest with the i r s there was not that kind of facts in this case it's a different factual issue because mrs kemble never touched the money and as soon as she learned and not from mrs dorman have learned it from the banker who came with the forms and said now you've got it you've got to fill these out she saw it in the new york times and as soon as she saw it in the new york times she voluntarily stepped forward she disclosed all of the accounts she cooperated with the i r s there was nothing dishonest and the facts on which the fifty percent penalty are based i think are very clearly erroneous there was a finding that mrs norman opened this account that she was the catalyst for this account that she had with her mother on the account none of that is correct and also the finding that the norm that mrs kemble had no relationship to either of the places in which the foreign accounts were kept in fact m with switzerland but she didn't open the swiss account she inherited an account that was switzerland she inherited it with a list of structures and she kept to the structure she didn't move the money or do anything that her father told her not to do but i think it's inaccurate to say that she didn't have any relationship with switzerland as if that informed why she was hiding the money in switzerland she wasn't hiding money in switzerland she had inherited the account and she had left it in the way that her father had told her to leave it and in our practice and we do a number of these f r cases a substantial number of the people who come into our practice are holocaust survivors web open these foreign accounts after after the war open these accounts in switzerland and kept them secret because they were afraid of another holocaust and they weren't really trusting of the government so that this is not an unusual situation and i think if you're looking at whether just you have a foreign account it's willful because you didn't disclose it take the three percent i don't think that's the reason that ve the penalty was set up to fifty percent and not fifty percent and i don't think that that's a reason that there is a distinction between a willful and non willful violation i think that this has taken on a life that the legislature did mean ten and i'd like to reserve the rest your report for swiss bank account u b s was at a minimum attributable to recklessness and will hold blindness where she was herself off from actual knowledge of the reporting requirements by repeatedly failing to review the tax returns that she signed which falsely represented that she ultimately exercises discretion and determine that a reduction was not warranted on these facts did the government consider the facts of the case or was set just just a matter of routine maximum penalty and of case no you the income that was or not the account and failed to pay taxes on that likely substantial income but i was nothing here that would suggest for example an effort to conceal the fruits of a criminal enterprise however we would suggest that because of the length of time there is no analogous case that ms campbell is pointed to or that we've located where someone actually concealed the account in the earnings from that account for three decades that there is substantial harm substantial tax loss that taxes on the substantial sum of money for a period of three dollars decades again there's certainly it looks as if she hadn't come forward voluntarily it would not have been discovered and could not have been discovered isn't there some sort of different i'm thinking about the cruel and unusual system of punishment that governs everything that we do it but you clearly maybe not particularly good includes government actions she came forward well and terribly put herself into a system to learn whether gone wrong made known that which would not have been known could not have been noted least as far as the source account was concerned and none the less is it with the same penalty as if she were a drug dealer when you are under oath whatever  else you are let me start by by addressing whether the i r s might have discovered this miss kamal came forward specifically when it become became publicly known that the department of justice was applying pressure to u b s where she held her account to turn over the names of its secret account holders m to taxpayers who were accepted into the program it was a two size fits all program the default penalty under that program was not the blacksmith if you present it was twenty percent there were a certain class of taxpayers who would qualify for a reduced penalty structure of five percent instead of twenty percent under that program missed can will not qualify for that reduced five percent structure and should have known that when she applied because these terms were publicly available the particular provision that should not qualify for bonds in the interest in two different investments she was changing the currency in which the count was nominated so she didn't qualify for the five percent structure but the ira said we will give you the twenty percent structure miss kimble for whatever reason decided that she did not want to take the twenty percent case in accordance with the law your penalty liability could go up it could go down there was a chance that she decided to take in fact with respect to the h s b c account which had a much smaller balance roughly one hundred and forty thousand dollars versus one million three  and was open for a substantially lower amount of time ten years versus roughly three decades that account the penalty was reduced from twenty percent of the program to ten percent with respect to the larger u b s account for which there was active concealment much longer period nondisclosure a much longer period nonpayment of taxes a much more substantial balance ultimately the penalty went out again we think that's something that miss campbell should anticipate it certainly that her lawyer should have advised her at the time that she was in the program the internal revenue manual which is publicly available in the irises website it's publicly available lexis westlaw specifically provides that the baseline penalty for an account exceeding one million dollars is  certainly there are mitigation guidelines and there's the potential for that penalty to be reduced but miss kimble knew at the time that she would you from the program was in buys in writing at the penalty might increase and the information that the iris has released publicly in the internal revenue manual suggested that that was a real possibility we don't we certainly don't point to ms kimmel as someone who had any kind of nefarious motives but the harm to the government in this instance because of the long period of non disclosure and the long period of taxes the three decades of nonpayment of taxes on a substantial amount there's no dispute is there with that she came forward voluntarily that's correct you are she came forward voluntarily ultimately though the government decided that the substantial harm to a look revenue and tax in this region from a long period of non disclosure was a factor that was accorded significant weight in the turning the appropriate penalty we would submit that was that each choice that the i r s was entitled to make and that the i r s is discretion is at its highest that it should be for the most deference when one is doing his balancing and wing competing interests and considerations that's what he did here in getting substantial weight to the amount to be account for standard for determining the amount of the penalty is the arm of the government is certainly one of the factors that the government considers is whether the penalty amount would be commensurate with the harm to the government but i didn't hear you say anything about assessing the penalty based upon the motives of the party involved so in this case the ira seems to me you are treating you know criminals and  that and no point had miss kimball stated that that was the reason why she maintained as a secret she never stated that she shared that she shared that fear that she was acting to honor her father's wishes now because of the shared fear and i think that's consistent with baseline numbers if the taxpayer has a history of criminal tax convictions a history of connections under the bank secrecy act a history of being set up or penalties and past this is that an expired twelve however the  caprio was entitled to find that that you had been waived where she did not make any constitutional challenge and raised only a statutory challenge but even if we turn to the merits we would know that the upper penalty is neither refined nor excessive a finding of either of which is sufficient on its own to defeat the the claim on the merits with respect to whether or not it's a fine we would suggest that there's three distinctions with respect the up or penalty ial tax loss and possibly investigation and then finally unlike the cases in austin the f r penalties are not a one size fits all penalty which is the supreme court's concern in those is that they were that they are imposed as a matter of course as a matter of statute without regard to the nature of the underlying violation and without regard to the harm that's caused by the violation here congress has given the i r s discretion to adjust the penalty to make it commensurate with the nature of the underlying offense and with the harm caused to the government which is in print in practice the way that the i r s also applies the imposition of those penalties turning to the excess in this in here we would note that the i r s again engaged in a reasoned decision making in looking at the amount of the power that was held in the account the length of time it went and disclosed the pattern of conduct and the pattern of the violations w number of years and because the length of period the length of time for which those taxes went unpaid was so long we think that this is in some ways analogous to a situation in which both the principal and interest and you count went untaxed because this isn't a situation where was five for ten years this is three decades and therefore the onset of scaped excitation the income that escaped taxation is substantial particularly when taking into account the interest that would accrue representing the time your money me i think that that the issue of excessiveness the fifty percent penalty is a very important issue in this case that it's completely separate if at least in the cases that i've seen if you claim that they're if you make a claim that of excessiveness and i don't think that that's a statutory argument i here when he didn't cite the it and that the government was certainly on notice by the time of the the motion for summary judgment because it was a substantial factor in our motion for summary judgment i don't know that you have to just the term the question of whether under the facts of this case the fifty percent was excessive which is a completely different one and when we look at what the iris reviewed the i r s didn't rely on thirty years of her not paying taxes of which a good deal of the thirty years was not her not paying taxes it was her father and her mother not paying taxes they relied upon erroneous factual findings they relied upon the finding that she controlled the account she put her mother on the account they relied upon the finding that she had no relationship to either of the countries in which these accounts were held the if you look at the entire facts and i'm not saying that she would be excused from a penalty because she followed her father's instructions as to be account i'm saying that when you look at the entire entirety of this case that it is not equitable and it is not musa nable and it is an abuse of discretion to basically a poll oppose that fifty percent penalty on everyone regardless of whether they deposited money that was illegal and regardless of whether they deposited the money with the intention of evading taxes regardless of all of the other factors that the i r s s to take into account in looking at this i don't think it's fair to say that mrs kimball for example ran into the i r s because she knew that that the i r s is going to come after her and she looked at the article and according to her and there's nothing to say that it was wrong she learned that she had not been reporting her foreign accounts and she immediately went in and reported her foreign accounts so i think that again if you look at the entirety of the circumstances in this case even if you find that this is will that there was not a justification for applying the maximum possible and altie and that a lower penalty should have been applied are you aware of any other cases which a lesser penalty was imposed by the government there are talking about the initial program just in the normal course yes there are cases in which lower penalties were imposed in fact there's one of them that the willfulness issue is being litigated in but it was a twenty five percent penalty for some reason but for the most part i haven't seen this particular issue come before in this particular issue of whether the fifty percent penalty should be imposed in every case across the board i have not seen this issue come before the sort of government does take into account factors that might warrant to mitigate it and i don't know if the government does or does not i know that nobody's challenging that issue but you just said that there are there is there was one case in which i don't know why there was a twenty five percent penalty there's a there are cases that i cite in which  on facts that are significantly more egregious than this case it was the actions were found to be not wealth so the ten thousand dollars penalty was imposed but i don't know that it that this particular