Source: https://tax-expatriation.com/2014/03/16/mixed-messages-canadian-ambassador-vs-irs-commissioner/
Timestamp: 2019-04-19 14:25:15+00:00

Document:
The apparent renewed focus of the government on U.S. citizens and LPRs residing overseas is worth considering in the current environment.
1. The IRS makes the determination of whether there is “reasonable cause” when no FBARs were previously filed. The IRS has not attempted to articulate in any real detail, what they view as “reasonable cause.” This is not a determination by the taxpayer. Will one know it when they see it?
2. USCs and LPRs living outside the U.S. can be subject to the FBAR penalties even if no U.S. income tax is owing (e.g., due to the foreign earned income exclusion and/or foreign tax credits). Each of these individuals have to track the exchange rate applicable in their home country of residence to know if and when the U.S. dollar thresholds in the U.S. law are met.
. . . The government does not dispute that McBride’s failure to comply with FBAR was the result of his belief that he did not have a reportable financial interest in the foreign accounts. However, because it is irrelevant that McBride “may have believed he was legally justified in withholding such information[,] [t]he only question that remains is whether the law required its disclosure.” Lefcourt, 125 F.3d at 83. Here, the FBAR requirements did require that McBride disclose his interests in the foreign accounts during both the 2000 and the 2001 tax years. As a result, McBride’s failure to do so was willful. . .
A. Constructive Knowledge of the Reporting Requirement Is Imputed to Taxpayers Who Sign Their Federal Tax Returns.
All persons in the United States are charged with knowledge of the Statutes-at-Large. Jones v. United States, 121 F.3d 1327 (9th Cir. 1997) (citing Bollow v. Federal Reserve Bank, 650 F.2d 1093, 1100 (9th Cir.1981)). It is well established that taxpayers are charged with the knowledge, awareness, and responsibility for their tax returns, signed under penalties of perjury, and submitted to the IRS. Magill v. Comm’r, 70 T.C. 465, 479-80 (1978), aff’d, 651 F.2d 1233 (6th Cir. 1981); Teschner v. Comm’r, T.C. Memo. 1997-498, *17 (1997); accord United States v. Overholt, 307 F.3d 1231, 1245-46 (10th Cir. 2002) (observing that in Bryan v. United States, 524 U.S. 184, 194-95 (1998), the Supreme Court distinguished cases like Cheek v. United States, 498 U.S. 192 (1991) and Ratzlaf v. United States, 510 U.S. 135 (1994) from another context of willfulness on the grounds that the “highly technical statutes” involved in criminal tax prosecutions “carve out an exception to the traditional rule that ignorance of the law is no excuse and require that the defendant have knowledge of the law.”) (internal quotation marks and citations omitted); see also Am. Vending Group, Inc. v. United States, 102 A.F.T.R.2d 6305, *6 (D. Md. 2008) (“Failing to read does not absolve a filer of his or his corporation’s legal obligations. Of course if one does not read the instructions, one does not know of the obligation to file the informational returns.”). . .
This entry was posted in Penalties.
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