Source: https://www.kpateloffice.com/ovdp-streamlined-filing-willfulness/
Timestamp: 2019-04-22 08:37:00+00:00

Document:
How Does the IRS Determine “Willfulness”?
1 How Does the IRS Determine “Willfulness” for FBAR Penalty Assessments?
3 What is a willful failure to file an FBAR?
4 How is Willfulness Proven?
How Does the IRS Determine “Willfulness” for FBAR Penalty Assessments?
IRC § 5321(a)(5) provides for the imposition of civil penalties for a willful failure to comply with the reporting requirements of IRC 5314 – i.e, when the person maintaining a foreign account fails to timely file an FBAR reporting that account despite having an obligation to do so.
For violations involving the willful failure to report the existence of an account, the maximum amount of the penalty that may be assessed is 50% of the balance of the account at the time of the violation or $100,000, whichever is greater.
the amounts of the penalties assessed for failing to disclose the account were proper.
What is a willful failure to file an FBAR?
In United States v. Garrity, 2018 WL 1611387 the court held that willfulness includes “knowingly” violating the FBAR requirements or “recklessly” doing so.
To show a taxpayer knowingly disregarded his FBAR reporting obligation can be proven through their actual or possibly constructive knowledge of those obligations.
An example that might involve willful blindness would be a person who admits knowledge of and fails to answer a question concerning signature authority at foreign banks on Schedule B of his income tax return. This section of the return refers taxpayers to the instructions for Schedule B that provide further guidance on their responsibilities for reporting foreign bank accounts and discusses the duty to file Form 90-22.1. These resources indicate that the person could have learned of the filing and record keeping requirements quite easily. It is reasonable to assume that a person who has foreign bank accounts should read the information specified by the government in tax forms. The failure to follow-up on this knowledge and learn of the further reporting requirement as suggested on Schedule B may provide some evidence of willful blindness on the part of the person. For example, the failure to learn of the filing requirements coupled with other factors, such as the efforts taken to conceal the existence of the accounts and the amounts involved may lead to a conclusion that the violation was due to willful blindness. The mere fact that a person checked the wrong box, or no box, on a Schedule B is not sufficient, by itself, to establish that the FBAR violation was attributable to willful blindness.
Ignorance and misunderstanding of the law can be asserted to show that the failure to comply was not willful. Willfulness requires a known legal duty.
Failure to supply an accountant with accurate and complete information.
Hiding, destroying, throwing away, or “losing” books and records.
There are a multitude of fact patterns that will vary from case to case.
Cheek v. United States, 498 U.S. 192 (1991); United States v. Pomponio, 429 U.S. 10, 12 (1976); United States v. Bishop, 412 U.S. 346, 360 (1973).
United States v. Schafer, 580 F.2d 774, 781 (5th Cir. 1978) (proof of evil motive or bad intent not required); United States v. Moylan, 417 F.2d 1002, 1004 (4th Cir. 1969) (“to require a bad purpose would be to confuse the concept of intent with that of motive”).
See United States v. Ramsey, 785 F.2d 184, 189 (7th Cir. 1986).
In other types of penalty cases general educational background and experience of defendant has been considered as bearing on defendant’s ability to form willful intent. United States v. Guidry, 199 F.3d 1150, 1157–58 (10th Cir. 1999) (willfulness inferred from defendant’s expertise in accounting via her business degree and her work experience as comptroller of a company); United States v. Klausner, 80 F.3d 55, 63 (2d Cir. 1996) (defendant’s background as a CPA, and extensive business experience including that as a professional tax preparer); United States v. Smith, 890 F.2d 711, 715 (5th Cir. 1989) (defendant’s background as an entrepreneur probative of willfulness); United States v. Segal, 867 F.2d 1173, 1179 (8th Cir. 1989) (defendant was a successful and sophisticated businessman); United States v. Rischard, 471 F.2d 105, 108 (8th Cir. 1973). See United States v. Diamond, 788 F.2d 1025 (4th Cir. 1986); United States v. MacKenzie, 777 F.2d 811, 818 (2d Cir. 1985) (willfulness inferred from the fact that each defendant had a college degree, one in economics and the other in business).

References: § 5321
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