Court Opinion

ID: 7802993
Source: CourtListenerOpinion
Date Created: 2022-08-23 21:01:48.532295+00
Date Added: 2024-06-11T16:29:33.658483
License: Public Domain

In the United States Court of Federal Claims
                                         No. 21-1202T
                                    Filed: August 23, 2022

    * * * * * * * * * * * * * * * * * **
   STEPHANIE L. FLINT AND DAVID J.                 *
   JONES, AS EXECUTORS OF THE                      *
   ESTATE OF MARGARET J. JONES,                    *
                                                   *
                      Plaintiffs,                  *
                                                   *
   v.
                                                   *
   UNITED STATES,                                  *
                                                   *
                      Defendant.                   *
                                                   *
        * * * * * * * * * * * * * * * * * **

       Patrick W. Martin, Law Offices of Procopio, Cory, Hargreaves & Savitch LLP, San
Diego, CA, for plaintiffs.

      Jason S. Selmont, Court of Federal Claims Section, Tax Division, United States
Department of Justice, Washington, D.C., for defendant. With him was G. Robson
Stewart, Assistant Chief, Court of Federal Claims Section, David I. Pincus, Chief, Court
of Federal Claims Section, and David A. Hubbert, Deputy Assistant Attorney General,
Tax Division.

                                        OPINION
HORN, J.

         In the complaint filed in this court, plaintiffs Stephanie L. Flint and David J. Jones,
as executors of the estate of Margaret J. Jones, assert two causes of action, “COUNT I
– BREACH OF CONTRACT,” and “COUNT II – ILLEGAL EXACTION.” (capitalization
and emphasis in original). For both alternative counts, in total plaintiffs seek $156,795.26,
the amount paid by Mrs. Jones to the United States Internal Revenue Service (IRS) as a
“Miscellaneous Offshore Penalty” (MOP), recovery of “pre and post-judgment interest as
allowed by law,” “attorneys’ fees and all costs of suit,” and “such other further relief as the
Court may deem just and proper.” Defendant filed a motion to dismiss Count One of
plaintiffs’ complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Rules of
the United States Court of Federal Claims (RCFC) (2021) and to dismiss Count Two of
plaintiffs’ complaint for lack of subject matter jurisdiction pursuant to RCFC 12(b)(1). The
motion has been fully briefed and oral argument has been held.
                                     BACKGROUND

       This case challenges the application of an IRS program, which, according to the
IRS website, is available to United States taxpayers holding foreign accounts not
previously disclosed to the IRS, in order to promote voluntary disclosure of those
accounts and to resolve existing tax obligations, including certain penalties related to the
previous failure to disclose those foreign accounts. In particular, the case currently before
the court concerns the Streamlined Filing Compliance Procedures, also called just the
Streamlined Procedures. While the Streamlined Procedures are detailed on the relevant
pages of the IRS website, the Streamlined Procedures do not appear to be spelled out in
statute or regulation, a fact which both parties confirmed at oral argument. 1

       The Streamlined Procedures, which are at issue in the current case, were first
available in 2012 and, following a revision in 2014, remain in operation at the time of the
issuance of this Opinion. According to the IRS website, the Streamlined Procedures:

       are available to taxpayers certifying that their failure to report foreign
       financial assets and pay all tax due in respect of those assets did not result
       from willful conduct on their part. The streamlined procedures are designed
       to provide to taxpayers in such situations with

              •   a streamlined procedure for filing amended or delinquent returns,
                  and
              •   terms for resolving their tax and penalty procedure for filing
                  amended or delinquent returns, and
              •   terms for resolving their tax and penalty obligations.

Streamlined     Filing    Compliance      Procedures,     INTERNAL REVENUE SERVICE,
https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-
procedures (last visited Aug. 23, 2022). To participate in the Streamlined Procedures,
taxpayers must:

       certify, in accordance with the specific instructions set forth below, that the
       failure to report all income, pay all tax and submit all required information
       returns, including FBARs (FinCEN Form 114, previously Form TD F 90-

1  A second program for foreign account disclosure, the Offshore Voluntary Disclosure
Program (OVDP), also existed at the time the events giving rise to the case currently
before the court occurred. The OVDP is not at issue in the case currently before the court,
and was ended by the IRS in September 2018. See IRS to end offshore voluntary
disclosure program; Taxpayers with undisclosed foreign assets urged to come forward
now, INTERNAL REVENUE SERVICE, https://www.irs.gov/newsroom/irs-to-end-offshore-voluntary-
disclosure-program-taxpayers-with-undisclosed-foreign-assets-urged-to-come-forward-now
(last visited Aug. 23, 2022).

                                              2
       22,[sic]1)[2] was due to non-willful conduct. Non-willful conduct is conduct
       that is due to negligence, inadvertence, or mistake or conduct that is the
       result of a good faith misunderstanding of the requirements of the law[.]

Id. (alterations and footnote added). According to the IRS website, “the streamlined filing
process will not culminate in the signing of a closing agreement with the IRS,” resolving
all potential liability related to foreign accounts, but rather “returns submitted under the
streamlined procedures may be subject to IRS examination, additional civil penalties, and
even criminal liability, if appropriate.” Id.

        The Streamlined Procedures are divided into two sets of procedures, distinguished
by the “residency” of the taxpayers eligible to participate: non-United States “residents”
are eligible to participate in the Streamlined Foreign Offshore Procedures, while United
States “residents” are able to participate in the Streamlined Domestic Offshore
Procedures. See id. Because the taxpayer with whom the above captioned case is
concerned, Margaret J. Jones, was a “resident” as well as a citizen of the United States
during the time at issue, the Streamlined Domestic Offshore Procedures are the
procedures relevant to the case currently before the court. On a different page, the IRS
website contains further information specific to the Streamlined Domestic Offshore
Procedures:

       U.S. taxpayers (U.S. citizens, lawful permanent residents, and those
       meeting the substantial presence test of IRC section 7701(b)(3)) eligible to
       use the Streamlined Domestic Offshore Procedures must (1) for each of the
       most recent 3 years for which the U.S. tax return due date (or properly
       applied for extended due date) has passed (the “covered tax return period”),
       file amended tax returns, together with all required information returns (e.g.,
       Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621), (2) for each of the
       most recent 6 years for which the FBAR due date has passed (the “covered
       FBAR period”), file any delinquent FBARs (FinCEN Form 114, previously
       Form TD F 90-22.1), and (3) pay a Title 26 miscellaneous offshore penalty.
       The full amount of the tax, interest, and miscellaneous offshore penalty due
       in connection with these filings should be remitted with the amended tax
       returns.

       The Title 26 miscellaneous offshore penalty is equal to 5 percent of the
       highest aggregate balance/value of the taxpayer’s foreign financial assets
       that are subject to the miscellaneous offshore penalty during the years in
       the covered tax return period and the covered FBAR period. For this
       purpose, the highest aggregate balance/value is determined by aggregating
       the year-end account balances and year-end asset values of all the foreign

2 In the above citation, “FBAR” is an abbreviation for the “Report of Foreign Bank and
Financial Accounts,” including Form TD-F 90-22.1 and successor forms such as the
FinCEN Form 114 referenced above. Requirements of FBAR filings and penalties for
failure to file are discussed more fully below.

                                             3
       financial assets subject to the miscellaneous offshore penalty for each of
       the years in the covered tax return period and the covered FBAR period and
       selecting the highest aggregate balance/value from among those years.

       A foreign financial asset is subject to the 5-percent miscellaneous offshore
       penalty in a given year in the covered FBAR period if the asset should have
       been, but was not, reported on an FBAR (FinCEN Form 114) for that year.
       A foreign financial asset is subject to the 5-percent miscellaneous offshore
       penalty in a given year in the covered tax return period if the asset should
       have been, but was not, reported on a Form 8938 for that year. A foreign
       financial asset is also subject to the 5-percent miscellaneous offshore
       penalty in a given year in the covered tax return period if the asset was
       properly reported for that year, but gross income in respect of the asset was
       not reported in that year.

U.S. Taxpayers Residing in the United States, INTERNAL REVENUE SERVICE,
https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-in-the-
united-states (last visited Aug. 23, 2022). The IRS website additionally states that

       if returns properly filed under these procedures are subsequently selected
       for audit under existing audit selection processes, the taxpayer will not be
       subject to accuracy-related penalties with respect to amounts reported on
       those returns, or to information return penalties or FBAR penalties, unless
       the examination results in a determination that the original return was
       fraudulent and/or that the FBAR violation was willful.

Id.

        In a separate section from, but on the same page as, the above-reproduced
instructions, the IRS website provides “Specific Instructions” for the Streamlined Domestic
Offshore Procedures, including the following:

       Complete and sign a statement on the Certification by U.S. Person Residing
       in the U.S. (Form 14654) certifying: (1) that you are eligible for the
       Streamlined Domestic Offshore Procedures; (2) that all required FBARs
       have now been filed (see instruction 9 below); (3) that the failure to report
       all income, pay all tax, and submit all required information returns, including
       FBARs, resulted from non-willful conduct; and (4) that the miscellaneous
       offshore penalty amount is accurate (see instruction 5 below). You must
       maintain your foreign financial asset information supporting the self -certified
       miscellaneous offshore penalty computation and be prepared to provide it
       upon request. You must submit an original signed statement and attach
       copies of the statement to each tax return and information return being
       submitted through these procedures. You should not attach copies of the
       statement to FBARs. Failure to submit this statement, or submission of an
       incomplete or otherwise deficient statement, will result in returns being

                                              4
       processed in the normal course without the benefit of the favorable terms
       of these procedures.

Id.

         The “miscellaneous offshore penalty” identified by the Streamlined Domestic
Offshore Procedures instructions is relevant to the case currently before the court, as
plaintiffs only seek the return of the Miscellaneous Offshore Penalty paid by Mrs. Jones
upon application to the Streamlined Procedures. According to defendant’s motion to
dismiss, payment of the Miscellaneous Offshore Penalty for the Streamlined Procedures
could only “‘serve as a compromise for all penalties not involving willfulness for the three
years covered by the program,’” and the IRS could still pursue participating taxpayers “for
fraud-related penalties for all years and for willful FBAR penalties for all years, as well as
for other penalties from the years prior to the three years submitted under the Streamlined
Procedures.”3 (emphasis in original) (quoting Maze v. United States, 206 F. Supp. 3d 1,
7 (D.D.C. 2016)).

      In addition to the Miscellaneous Offshore Penalty associated with the Streamlined
Procedures, discussed above, this case concerns a second, separate category of penalty,
what are referred to as willful FBAR penalties. Under the Bank Secrecy Act, 31 U.S.C. §§
5311 et seq. (2018),

       the Secretary of the Treasury shall require a resident or citizen of the United
       States or a person in, and doing business in, the United States, to keep
       records, file reports, or keep records and file reports, when the resident,
       citizen, or person makes a transaction or maintains a relation for any person
       with a foreign financial agency.

31 U.S.C. § 5314(a). The regulation at 31 C.F.R. § 1010.350 (2021), promulgated
pursuant to the Bank Secrecy Act, prescribes the use of “the Report of Foreign Bank and
Financial Accounts [FBAR] (TD-F 90-22.1), or any successor form,” for reports required
under 31 U.S.C. § 5314. 31 C.F.R. § 1010.350(a) (2021). “FBAR” is an acronym for the
report required under the Bank Secrecy Act, and penalties assessed for failure to comply
with FBAR reporting requirements are referred to as “FBAR penalties.”

3 By contrast, participation in the OVDP, which is not at issue in this case, afforded the
following benefits: a compromise of all penalties owed by the taxpayer, including FBAR
penalties, except accuracy-related and failure-to-file penalties; not to “recommend
criminal prosecution to the Department of Justice for any issue relating to tax
noncompliance or failure to file Report of Foreign Bank and Financial Accounts [FBARs];”
and a closing agreement settling tax obligations relating to the disclosed period and prior
years. Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers
2014, INTERNAL REVENUE SERVICE, https://www.irs.gov/individuals/internation al-
taxpayers/offshore-voluntary-disclosure-program-frequently-asked-questions-and-
answers-2014 (last visited Aug. 23, 2022).

                                              5
        FBAR penalties are assessed pursuant to 31 U.S.C. § 5321 against United States
citizens and residents who fail to report their interest in any foreign accounts they hold,
as required by the statute at 31 U.S.C. § 5314 and the implementing regulation, 31 C.F.R.
§ 1010.350. In general, FBAR penalties “shall not exceed $10,000.” 31 U.S.C. §
5321(a)(5)(B)(i). The statute at 31 U.S.C. § 5321(a)(5)(C), however, provides that “[i]n the
case of any person willfully violating, or willfully causing any violation of, any provision of
section 5314,” the FBAR penalty shall be assessed at the greater of $100,000.00, id. §
5321(a)(5)(C)(i)(I), or, as relevant to the above captioned case, “50 percent of the
amount” of “the balance in the account at the time of the violation.” Id. §§
5321(a)(5)(C)(i)(II), 5321(a)(5)(D)(ii).4

        According to plaintiffs’ complaint, Margaret J. Jones was a citizen of Canada and
of the United States at the time of her death on March 11, 2021. According to plaintiffs’
complaint, “Mrs. Jones was born in Canada in 1928 and lived there for the first 26 years
of her life.” Jeffrey L. Jones, Mrs. Jones’ late husband, “was born in New Zealand in 1919
and lived there for the first thirty years of his life.” Mrs. Jones and her husband met and
were married in Canada and in 1954 Mrs. Jones and her husband moved to the United
States, to California. According to plaintiffs’ complaint, Mrs. Jones and her husband
became citizens of the United States in 1969. According to plaintiffs’ complaint, Mrs.
Jones and her husband both possessed a high school education and neither attended
college, “[n]or did either of them ever have any formal tax, accounting, financial, or legal
training.” Mr. Jones died on March 11, 2013. Margaret Jones died on March 11, 2021.

       While living in the United States, Mrs. Jones and her husband maintained foreign
bank accounts in Canada and New Zealand. According to plaintiffs’ Proposed Statement
of Uncontroverted Facts originally filed in support of a summary judgment motion in one
of the actions filed by or against Mrs. Jones, in her own capacity or as executor of Mr.
Jones’ estate, in the United States District Court for the Central District of California,
Jones v. United States, No.19-00173-JVS(RAO),5 which was attached to plaintiffs’ current

4The statute at 31 U.S.C. § 5321(a)(5)(C)(ii) additionally states that, for willful violations
of the FBAR reporting requirement, “subparagraph (B)(ii),” which prescribes that “[n]o
penalty shall be imposed” when “such violation was due to reasonable cause” and the
amount in question “was properly reported,” 31 U.S.C. § 5321(a)(5)(B)(ii)(I)-(II), “shall not
apply.” Id. § 5321(a)(5)(C)(ii).

5 As discussed further below, three cases regarding the tax obligations of Mr. and Mrs.
Jones were filed in the Central District of California prior to the filing of the above
captioned case in this court: Margaret Jones, as Executor, Estate of Jeffrey Jones v.
United States, Case No. 19-00173-JVS(RAO), brought by Mrs. Jones, on behalf of the
estate of her husband, to recover a partial payment made on a penalty assessed against
the estate; Margaret Jones v. United States, Case No. 19-04950-JVS(RAO), brought by
Mrs. Jones, in her individual capacity, to recover a partial payment made on a penalty
assessed against her individually; and United States v. Margaret Jones, Individually, and
Margaret Jones, as Executor, Estate of Jeffrey Jones, Case No. 20-06173-JVS(RAO),

                                              6
complaint in this court, Mrs. Jones and her husband had eleven foreign accounts during
the period of time at issue in this case: “three in Canada and eight in New Zealand.”
According to the same Proposed Statement of Uncontroverted Facts, of the eleven
foreign accounts, “[f]our of the New Zealand accounts were solely in the name of Mr.
Jones,” “[t]hree of the foreign accounts (two in Canada and one in New Zealand) were
solely in the name of Mrs. Jones,” and Mrs. Jones and her husband “jointly held four
foreign accounts,” one in Canada and three in New Zealand. From the record before the
court, it appears that prior to the death of Mr. Jones, Mrs. Jones and her husband did not
report or otherwise disclose the existence of the foreign accounts to the IRS in their tax
returns or to their tax return preparer, Mr. William Burke, a certified public accountant.

         According to plaintiffs’ complaint in this court, on July 7, 2014, more than one year
after her husband’s death, Mrs. Jones completed two “Forms 1040X, for each of the tax
years 2011 and 2012, reporting all unreported income from all the foreign accounts . . .
paying outstanding income taxes, and checking the ‘yes’ box on the Schedule B
acknowledging the ownership of foreign accounts.” The Forms 1040X are titled “Amended
U.S. Individual Income Tax Return,” (capitalization in original), and Mrs. Jones filed the
Forms 1040X for both 2011 and 2012 jointly with the estate of her husband, filling in the
names of Jeffrey L. Jones and of Margaret J. Jones, as well as including their respective
Social Security numbers, on both Forms 1040X. Both Forms 1040X are referenced in
plaintiffs’ complaint in this court. The Forms 1040X completed by Mrs. Jones appear to
be the first acknowledgement to the IRS by Mrs. Jones, both in her individual capacity
and as the executor of her husband’s estate, regarding ownership of the foreign accounts.
Each Form 1040X provides, in relevant part, amended information regarding Mr. and Mrs.
Jones’ adjusted gross income, taxable income, and tax liability for the relevant tax year.
Attached to each Form 1040X is an amended Schedule B, “Interest and Ordinary
Dividends,” for the relevant year, which, like the Forms 1040X they accompany, were
referenced in plaintiffs’ complaint and filed with this court.

        The Form 1040X for tax year 2011 notes corrections to what was originally
reported for the adjusted gross income, taxable income, and tax liability for Mr. and Mrs.
Jones for tax year 2011. Mr. and Mrs. Jones’ adjusted gross income, originally reported
as $445,691.00, should have been reported as $696,900.00, a difference of $251,209.00
for tax year 2011; Mr. and Mrs. Jones’ taxable income, originally reported as $395,847.00,
should have been reported as $647,056.00, also a difference of $251,209.00 for tax year
2011; and Mr. and Mrs. Jones’ tax liability, originally reported as $120,931.00, should
have been $172,035.00, a difference of $51,104.00 for tax year 2011.

        As noted above, attached to the Form 1040X for 2011 is an amended Schedule B
for the same tax year. The amended Schedule B for tax year 2011, which is titled “Interest
and Ordinary Dividends,” and which states “[a]ttach to Form 1040A or 1040,” includes
three parts, “Part I Interest,” “Part II Ordinary Dividends,” and “Part III Foreign Accounts

brought by the government to recover the balance due on the penalties assessed against
Mrs. Jones and against the estate of Mr. Jones.

                                              7
and Trusts.”6 For Parts I and II, Mrs. Jones listed the interest and dividends, respectively,
from financial institutions, including ANZ Bank, Bell Gully, Chase, County Commerce
Bank, Heartland Bank, Morgan Stanley, New Zealand Inland Revenue, Royal Bank of
Canada, US Bank, and Wells Fargo, in Part I, and Morgan Stanley, in Part II. “Part III
Foreign Accounts and Trusts” asks the following questions, to which Mrs. Jones provided
the following answers:

         You must complete this part if you (a) had over $1,500 of Yes           No
         taxable interest or ordinary dividends; (b) had a foreign
         account; or (c) received a distribution from, or were a grantor
         of, or a transferor to, a foreign trust.
         7a At any time during 2011, did you have a financial interest X
         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
         …………………………………………………………………….
         If ‘Yes,’ are you required to file Form TD F 90-22.1 [FBAR] X
         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
         …………………………………................................................
         b 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. SEE STATEMENT 8
         8 During 2011, did you receive a distribution from, or were             X
         you the grantor of or, or transferor to, a foreign trust? If ‘Yes,’
         you may have to file Form 3520. See instructions
         …………………………………………………………………….

(capitalization and emphasis in original). Mrs. Jones also attached to the Form 1040X
amended tax return for 2011 an “Explanation of Changes” which references Part III of the
amended Schedule B for 2011 and states:

6 Plaintiffs’ filings frequently refer to “Part IV” of the amended Schedule B form. The
amended Schedule B forms included in the record currently before this court do not
contain a “Part IV,” although plaintiffs state in their response to defendant’s motion to
dismiss that Mrs. Jones “check[ed] the ‘yes’ box on the Part IV of Schedule B, reflecting
ownership of these foreign accounts.” Plaintiffs’ references to “Part IV” and “the ‘yes’ box”
therein appear, therefore, to be references to “Part III Foreign Accounts and Trusts” of
Schedule B, which does contain a “‘yes’ box” that Mrs. Jones checked in her amended
tax returns, Forms 1040X, for the tax years 2011 and 2012.

                                              8
       MRS. MARGARET JOSEPHINE JONES IS A CANADIAN CITIZEN AND A
       U.S. TAX RESIDENT.[7 ] SHE IS 85 YEARS OLD AND HAS BEEN
       RESIDING IN THE U.S. FOR MANY YEARS AS A NATURALIZED
       CITIZEN.

       MR. JEFFREY LEWIS JONES, THE LATE HUSBAND OF MRS. JONES,
       PASSED AWAY IN MARCH 2013 AT AGE 93. HE WAS A NEW ZEALAND
       CITIZEN AS WELL AS A U.S. TAX RESIDENT AND NATURALIZED
       CITIZEN.

       MRS. JONES’S UNDERSTANDING WAS THAT THE TAXES WITHHELD
       IN THE FOREIGN COUNTRIES, SUCH AS NEW ZEALAND’S 10%
       WITHHOLDING TAX, WERE THE FINAL TAXES DUE ON THOSE
       INCOME AMOUNTS UNTIL SUCH TIME AS THE UNDERLYING FUNDS
       WERE BROUGHT INTO THE U.S.

       THIS FORM 1040X IS BEING FILED TO INCLUDE IN INCOME THE
       AMOUNTS OF INTEREST INCOME GENERATED BY THE BANK
       ACCOUNTS FOR THE RELEVANT YEAR AND TO REVISE THE
       AMOUNT OF FOREIGN TAX CREDIT CLAIMED FOR ANY
       WITHHOLDING TAXES PAID.

       THE ADDITIONAL INTEREST INCOME INCREASES ADJUSTED GROSS
       INCOME BY $251,209 (LINE 8A, FORM 1040). IN ADDITION, A FOREIGN
       TAX CREDIT OF $22,699 IS BEING CLAIMED (LINE 47, FORM 1040).
       THE COMBINED CHANGES INCREASE TAX BY $51,104.

(capitalization in original).

       Mrs. Jones also completed a Form 1040X amended tax return for tax year 2012
on behalf of herself and her deceased husband, which defendant filed with the court. The
Form 1040X for tax year 2012 notes corrections to what was originally reported for the
adjusted gross income, taxable income, and tax liability for Mr. and Mrs. Jones for tax
year 2012. Mr. and Mrs. Jones’ adjusted gross income, originally reported as
$376,066.00, should have been reported as $621,258.00, a difference of $245,192.00 for
tax year 2012; Mr. and Mrs. Jones’ taxable income, originally reported as $334,380.00,
should have been reported as $579,572.00, also a difference of $245,192.00 for tax year

7 Mrs. Jones referred to herself as a “U.S. tax resident” on the Explanation of Changes
form, presumably because as a “resident” of the United States, she was eligible to
participate in the Streamlined Domestic Offshore Procedures, which are reserved for
“residents” of the United States. In other documents in the record before the court, Mrs.
Jones or the executor plaintiffs in this court refer to Mrs. Jones as a Canadian citizen, and
to Mr. Jones as a New Zealand citizen. According to plaintiffs’ complaint, however, “Mr.
and Mrs. Jones became citizens of the United States in 1969.”

                                             9
2012; and Mr. and Mrs. Jones’ tax liability, originally reported as $96,264.00, should have
been $148,577.00, a difference of $52,313.00 for tax year 2012.

        As with the Form 1040X for 2011, attached to the Form 1040X for 2012 is an
amended Schedule B, which includes the same three parts as the Schedule B for tax year
2011, “Part I Interest,” “Part II Ordinary Dividends,” and “Part III Foreign Accounts and
Trusts.” The financial institutions listed under Parts I and II on the Schedule B for tax year
2012 are identical to those listed on the Schedule B for tax year 2011. Similarly, the
questions and answers included in Part III of the Schedule B for tax year 2012 are
identical to the questions and answers included in Part III of the Schedule B for tax year
2011, except that all references to 2011 in the questions instead refer to 2012 and Mrs.
Jones’ answer to question 7b read “SEE STATEMENT 7.” (capitalization and emphasis
in original).

      As she had done for the Form 1040X for tax year 2011, Mrs. Jones attached to the
Form 1040X for tax year 2012 an “Explanation of Changes” which references Part III and
which was identical to the “Explanation of Changes” attached to the Form 1040X for 2011,
except for the last paragraph of the Form 1040X for tax year 2012, which reads: “THE
ADDITIONAL INTEREST INCOME INCREASES ADJUSTED GROSS INCOME BY
$245,192 (LINE 8A, FORM 1040). IN ADDITION, A FOREIGN TAX CREDIT OF $22,986
IS BEING CLAIMED (LINE 47, FORM 1040). THE COMBINED CHANGES INCREASE
TAX BY $52,313.” (capitalization in original).

       According to the copies of the Forms 1040X filed with the court by defendant, Mrs.
Jones does not appear to have signed either the Form 1040X for 2011 or for 2012, nor
was either form signed by a tax preparer of the forms. Instead, the signature portions of
both Forms 1040X note in the space “Spouse’s signature” that Mrs. Jones was “FILING
AS SURVIVING SPOUSE,” and the sections labeled “Paid Preparer Use Only” indicate
that Andrew W. Gardner of Vance Thrift & Biller LLP CPAs was the preparer of the Forms
1040X, without a signature. (capitalization in original). While the Forms 1040X in the
record currently before the court are not signed by Mrs. Jones or the preparer of the
forms, neither plaintiffs nor defendant have contested the accuracy or operative validity
of the Forms 1040X as presented to the court in this case.

        After filing her amended tax returns for 2011 and 2012, Mrs. Jones applied to
participate in the Streamlined Procedures to resolve her outstanding tax liability with
respect to the foreign bank accounts. According to plaintiffs’ complaint,

       [o]n March 16, 2015, Mrs. Jones filed a Domestic Streamlined Submission
       [SDO][8 ] with the IRS which included (i) amended joint income tax returns

8 Plaintiffs frequently use “SDO” in relation to the Streamlined Procedures, including in
their complaint, which refers to “the ‘streamlined filing compliance procedures’ for
domestic individuals (‘SDO’),” (capitalization in original), as well as in plaintiffs’ response
to defendant’s motion to dismiss, which states that “Mrs. Jones filed a Domestic
Streamlined Submission (‘SDO’),” (capitalization and emphasis in original). Although

                                              10
       (Forms 1040X for 2011 and 2012 that had been previously filed on July 7,
       2014 and an original form 1040 for 2013 that was filed April 15, 2014); (ii)
       filed outstanding FBARs for 2008 through 2013; (iii) submitted a certificate
       of non-willfulness, and (iv) paid a miscellaneous penalty of $156,795.26
       [5%MOP] (the “Streamlined Submission”).

(emphasis in original; alterations in original except “[o]n;” footnote added). Plaintiffs’
complaint alleges that as part of the Streamlined Procedures, Mrs. Jones completed a
Form 14654 and paid a Miscellaneous Offshore Penalty in the amount of $156,795.26,
which was calculated based on five percent of “the highest account balance of” the foreign
accounts held by Mrs. Jones alone and by Mr. and Mrs. Jones jointly during the years
2008 through 2013. Plaintiffs’ complaint further alleges that on the Form 14654, “[t]o meet
the eligibility requirements for a streamlined submission, Mrs. Jones submitted a
certification under penalty of perjury certifying that her failure to report her foreign
accounts did not result from willful conduct.”

        The record currently before the court contains two versions of the Form 14654
completed by Mrs. Jones. The first version was submitted by plaintiffs as an attachment
to their complaint, but while the form was filled out, the form was unsigned and undated.
The first version of the Form 14654 also is accompanied by no attachments. The second
version was submitted by defendant as an attachment to the motion to dismiss currently
before the court, and the second version was signed by Mrs. Jones, dated April 13, 2015,
and accompanied by two attachments, Attachment A and Attachment B. Otherwise the
two versions of the Form 14654 are identical. Neither party has controverted the contents
of the Form 14654 or Attachments A and B. Although Mrs. Jones also was acting as the
executor of her late husband’s estate at the time that she completed the Form 14654,
Mrs. Jones completed the Form 14654 and entered the Streamlined Procedures only with
respect to her individual capacity, and not jointly for the estate of Mr. Jones.9

      Attachment A consists of six pages, each corresponding to a tax year from 2008
to 2013 and each stating it contains “[i]nformation regarding Foreign Financial Assets
Subject to the 5% Miscellaneous Offshore Penalty.” (capitalization in original). Attachment
A provides the year-end balance for each of the relevant tax years for the eleven bank
accounts distributed among three financial institutions, Belly Gully and ANZ Bank in New

plaintiffs do not define the acronym “SDO,” it appears to stand for “Streamlined Domestic
Offshore,” in reference to the subset of the Streamlined Procedures under which Mrs.
Jones applied.

9That Mrs. Jones only entered the Streamlined Procedures in her individual capacity is
confirmed by plaintiffs’ response to defendant’s motion to dismiss, which states that “the
estate did not enter into the program because it was not clear it was ever available for an
estate; which has since been corrected by the IRS in their later SFCP [Streamlined Filing
Compliance Procedures] rules.” (alteration added). The record currently before the court
does not indicate whether Mrs. Jones or her executors ever filed to enter the Streamlined
Procedures on behalf of the estate of Mr. Jones after the IRS issued its correction.

                                            11
Zealand and Royal Bank of Canada in Canada. Attachment A provides that the total year-
end balance of the eleven foreign accounts was $1,557,423.37 in 2008, $1,997,024.69 in
2009, $2,908,403.63 in 2010, $2,948,375.11 in 2011, $3,135,905.24 in 2012, and
$3,001,106.12 in 2013. According to the Proposed Statement of Uncontroverted Facts
and Conclusions of Law, previously filed by Mrs. Jones in proceedings in the Central
District of California and attached to plaintiffs’ complaint in the above captioned case, all
the accounts listed in Attachment A to Mrs. Jones’ Form 14654 were held either in the
name of Mrs. Jones alone or jointly in the names of Mr. and Mrs. Jones.

       In Attachment B, Mrs. Jones states the following:

       As the attachment B of the IRS Form 14654, I, Mrs. Margaret J. Jones, am
       providing the specific reasons why, due to non-willful conduct, I did not
       report all income, pay all tax, and submit all required information returns
       with respect to my foreign financial assets.

       Based on the facts listed below, I will explain my misunderstandings
       regarding the foreign financial assets belonging to my late husband and I,
       going back to World War II; and why my misunderstanding was in good faith
       and based upon what I have now learned was an erroneous belief about
       U.S. taxation of foreign source income.

       1.   I am a Canadian citizen and a U.S. tax resident. I have been residing
            in the U.S. for many years, where I became a naturalized citizen.

       2.   My late (deceased) husband, Mr. Jeffrey Lewis Jones, was born on
            November 25, 1919, and passed away in March 2013. He was born in
            New Zealand and was always a citizen as well as a U.S. tax resident
            and naturalized citizen.

       3.   Around the time of World War II, and while a resident of New Zealand,
            my husband established certain investment accounts in New Zealand.
            I was not aware of these accounts until fairly recently, when he became
            ill shortly before his death.

       4.   My husband also inherited various New Zealand assets from his
            parents when they passed away in New Zealand several decades ago.

       5.   Prior to his death, my husband added me as a joint owner of some of
            his New Zealand accounts. Neither my husband nor I ever used or
            spent the funds in these accounts as it was our understanding that we
            would be subject to U.S. taxation (in addition to New Zealand taxation)
            if those assets were brought to the U.S.

       6.   I separately established savings accounts in Canada many decades
            ago, when I was living in Canada. Similarly, these Canadian accounts

                                             12
     grew substantially over the years. Jointly, the Canadian and New
     Zealand accounts will be referenced as the “Bank Accounts.”

7.   Neither I, nor my late husband ever spent or withdrew funds from any
     of the Bank Accounts.

8.   The assets and funds were held under my name only, where I was
     transparent and openly communicated with the foreign financial and
     legal advisors regarding the ongoing investments and reinvestments.

9.   I do not have specific training or a background in tax, finance, or
     related accounting matters, although I consider myself an educated
     and knowledgeable woman (now of an advanced age).

10. I was under the belief (which I now realize was a misunderstanding,
    based upon subsequent legal advice I received) that unless assets are
    brought to the United States, the income from those foreign assets are
    not subject to U.S. income taxation and would only be taxed in the
    foreign country where the income is earned.

11. My understanding was that the taxes withheld in the foreign countries,
    such as New Zealand’s withholding tax, were the final taxes due on
    those income amounts until such time as the underlying funds were
    brought into the U.S. Such understanding was based on advice my
    husband received from this New Zealand tax and legal counsel. Hence
    the assets were left in the foreign accounts during our lifetimes.

12. My husband and I had been jointly filing U.S. federal income tax
    returns for the last several years, but we never reported the interest
    income generated by the Bank Accounts on those returns based upon
    our erroneous understanding of how the U.S. tax laws apply to foreign
    source income.

13. Neither my husband nor I filed Treasury Form TD F 90-22.1, Report of
    Foreign Bank and Financial Accounts reporting our interests in the
    Bank Accounts (the “FBAR”), prior to doing so for the 2013 tax year
    because we were never advised of the requirement to file such FBAR
    form.

14. My husband and I always hired a professional tax return preparer (who
    was a U.S. CPA), to prepare our U.S. federal and California income
    tax returns.

15. My husband’s and my U.S. CPA, who prepared our U.S. income tax
    returns, knew that I am from Canada and that my husband was from
    New Zealand. He was aware that I am a Canadian citizen and

                                   13
            immigrant to the U.S. and that my late husband was a New Zealand
            citizen and immigrant to the U.S.

       16. My husband’s and my U.S. CPA never asked the two of us if we had
           assets in either of our native countries of New Zealand or Canada. He
           also never asked my husband or me if we had foreign accounts that
           would need to be reported.

       17. None of the U.S. tax return preparers of my husband and I ever
           advised us of the requirements: (i) to file annual FBAR forms, and (ii)
           report our interest income earned from the Bank Accounts on our
           annual Form 1040.

       18. I started to become aware of various reporting requirements of foreign
           bank accounts after contacting my current U.S. tax attorney, who
           specializes in international tax and reporting matters.

       19. I have otherwise complied with my U.S. tax reporting and compliance
           responsibilities under the law and have been meticulous and detailed
           about complying with all laws and taxation laws.

       In short, the facts presented above demonstrate that my understanding of
       the law was a good faith misunderstanding of how United States taxation
       law applies to assets located in the country of origin of immigrants, such as
       is my case since I am from Canada and my late (deceased) husband who
       was from New Zealand.

       As a result, the consequence of my actions was non-willful.

(capitalization and emphasis in original). At the bottom of Attachment B is the following
certification: “Under penalties of perjury, I declare that I have examined this document, all
attachments, and accompanying statements, and to the best of my knowledge and belief,
they are true, correct, and complete.” Mrs. Jones signed and certified Attachment B.

       On the Form 14654, Mrs. Jones provided the following certification:

       I am providing amended income tax returns, including all required
       information returns, for each of the most recent 3 years[10] for which the

10 The references on the Form 14654 to “3 years” and to the years 2011, 2012, and 2013
in the context of amended tax returns appear to relate to the requirement, stated on the
IRS website, noted above, that participants in the Streamlined Domestic Offshore
Procedures are required to, “for each of the most recent 3 years for which the U.S. tax
return due date (or properly applied for extended due date) has passed (the ‘covered tax
return period’), file amended tax returns . . . .” U.S. Taxpayers Residing in the United
States, Internal       Revenue Service, https://www.irs.gov/individuals/internation al -

                                             14
       U.S. tax return due date (or properly applied for extended due date) has
       passed. I previously filed original tax returns for these years. The tax and
       interest I owe for each year are as follows[.]

(alterations added). On the Form 14654, Mrs. Jones entered “$0.00” as the “Amount of
Tax I Owe” for each of the tax years 2011, 2012, and 2013. (capitalization in original).
Mrs. Jones further certified on the Form 14654 that:

       I failed to report income from one or more foreign financial assets during the
       above period.

       I meet all the eligibility requirements for the Streamlined Domestic Offshore
       procedures.

       If I failed to timely file correct and complete FBARs for any of the last 6
       years, I have now filed those FBARs.

       During each year in either my 3-year covered tax return period or my 6-year
       covered FBAR period, my foreign financial assets subject to the 5%
       miscellaneous offshore penalty were as follows[.]

(capitalization in original; alterations added). According to the Form 14654, rather than
using the spaces provided on the form, Mrs. Jones wrote for each of the tax years 2008
through 2013, “[p]lease find all accounts information in Page 1[-6] of Attachment A[.]”
(alterations added). The Form 14654 states at the conclusion of the certification: “The
assets listed in this certification are my only foreign financial assets subject to the
5% miscellaneous offshore penalty.” (emphasis in original).

        Following the certification, the Form 14654 provides for the taxpayer completing
the form to compute the Miscellaneous Offshore Penalty. The Form 14654 directs Mrs.
Jones to “enter the highest total balance/asset value among the years listed above,”
referring to the years 2008 through 2013. (emphasis in original). Mrs. Jones entered
“$3,135,905.24 for tax year 2012” in the space provided. The Form 14654 then provides
that the Miscellaneous Offshore Penalty would be equal to the “Highest Account
Balance/Asset Value from above multiplied by 5%,” which on Mrs. Jones’ form equaled
$156,795.26. (emphasis in original). The Form 14654 also states: “Note: Your payment
should equal the total tax and interest due for all three years [2011, 2012, and 2013] plus
the miscellaneous offshore penalty. You may receive a balance due notice or a refund if
the tax, interest, or penalty is not calculated correctly.” Mrs. Jones indicated that she owed
nothing aside from the Miscellaneous Offshore Penalty, and for this reason in the space
labeled “Total Payment” on the Form 14654, Mrs. Jones entered an amount equal to the
Miscellaneous Offshore Penalty.

taxpayers/u-s-taxpayers-residing-in-the-united-states (last visited Aug. 23, 2022). For
Mrs. Jones, the three years would have been 2011, 2012, and 2013, because the “tax
return due date” for 2014, April 15, 2015, had not yet passed.

                                             15
      Following the calculation section of the Miscellaneous Offshore Penalty to be paid
by Mrs. Jones, Mrs. Jones’ Form 14654 includes the following:

      In consideration of the Internal Revenue Service’s agreement not to assert
      other penalties with respect to my failure to report foreign financial assets
      as required on FBARs or Forms 8938 or my failure to report income from
      foreign financial assets, I consent to the immediate assessment and
      collection of a Title 26 miscellaneous offshore penalty for the most recent
      of the three tax years for which I am providing amended income tax returns.
      I waive all defenses against and restrictions on the assessment and
      collection of the miscellaneous offshore penalty, including any defense
      based on the expiration of the period of limitations on assessment or
      collection. I waive the right to seek a refund or abatement of the
      miscellaneous offshore penalty.

      I agree to retain all records (including, but not limited to, account
      statements) related to my assets subject to the 5% miscellaneous offshore
      penalty until six years from the date of this certification. I also agree to retain
      all records related to my income and assets during the period covered by
      my amended income tax returns until three years from the date of this
      certification. Upon request, I agree to provide all such records to the Internal
      Revenue Service.

      My failure to report all income, pay all tax, and submit all required
      information returns, including FBARs, was due to non-willful conduct. I
      understand that non-willful conduct is conduct that is due to negligence,
      inadvertence, or mistake or conduct that is the result of a good faith
      misunderstanding of the requirements of the law.

      I recognize that if the Internal Revenue Service receives or discovers
      evidence of willfulness, fraud, or criminal conduct, it may open an
      examination or investigation that could lead to civil fraud penalties, FBAR
      penalties, information return penalties, or even referral to Criminal
      Investigation.

      Provide specific reasons for your failure to report all income, pay all tax, and
      submit all required information returns, including FBARs. If you relied on a
      professional advisor, provide the name, address, and telephone number of
      the advisor and a summary of the advice. If married taxpayers submitting a
      joint certification have different reasons, provide the individual reasons for

                                              16
         each spouse separately in the statement of facts. The field below[11 ] will
         automatically expand to accommodate your statement of facts.

The Form 14654 concludes with a declaration by Mrs. Jones that the information
contained in the Form 14654 and “all accompanying schedules and statements” was
“true, correct, and complete.”

        It is the Form 14654, with the terms contained therein and the accompanying
payment of the Miscellaneous Offshore Penalty, which plaintiffs claim, in Count One of
their complaint filed in this court, constituted a contract between Mrs. Jones and the IRS.
According to plaintiffs’ complaint, Mrs. Jones paid the Miscellaneous Offshore Penalty to
the IRS as calculated by Mrs. Jones on the Form 14654, in the amount of $156,795.26.

         After Mrs. Jones submitted her Form 14654 and paid the Miscellaneous Offshore
Penalty, Internal Revenue Agent Keli Stelmar informed Mrs. Jones, in a letter dated
September 13, 2016, which was attached to defendant’s motion to dismiss, that her
“federal return for the period(s) shown above was selected for examination” with respect
to the “Tax period(s)” “December 31, 2013.” The letter instructed Mrs. Jones to “call me
on or before the response date” of September 27, 2016 to discuss five matters: (1) “[i]tems
on your return that I will be examining;” (2) “[t]ypes of documents I will ask you to provide;”
(3) “[t]he examination process;” (4) “[a]ny concerns or questions you may have;” and (5)
“[t]he date, time and agenda for our first meeting.” The letter referred to “preliminary items
identified for examination,” and listed only one, “[i]ncome,” although the letter stated that
“[d]uring the course of the examination, it may be necessary to add or reduce the list of
items.”

        According to the record before the court, in 2018, the IRS commenced an
examination of the Joneses’ failure to report their foreign accounts. In a letter dated May
11, 2018, Internal Revenue Agent Keli Kim (formerly Keli Stelmar) informed Mrs. Jones
that, “[a]s the executrix of the Estate of Jeffrey L. Jones, we are notifying you of an
examination of Jeffrey L. Jones’ compliance with the filing of FinCEN Report 114 (formerly
Form TD F 90-22.1) Report of Foreign Bank and Financial Accounts (FBAR).” The letter
informed Mrs. Jones that

         Section 5314[12 ] of Title 31 of the United States Code (U.S.C.) requires U.S.
         persons, including U.S. citizens, U.S. residents, and certain entities formed

11 Rather than filling in the field referred to in the Form 14654’s instructions, Mrs. Jones
inserted the statement, “[p]lease see Attachment B as the statement with respect to the
specific reasons for the Taxpayer,” (capitalization in original), which is discussed above.

12   31 U.S.C. § 5314 (2018) provides:

         (a) Considering the need to avoid impeding or controlling the export or
         import of monetary instruments and the need to avoid burdening
         unreasonably a person making a transaction with a foreign financial agency,

                                              17
      under U.S. law, to report their financial interest in or authority over any
      foreign financial accounts if the total value of these financial accounts
      exceeds $10,000[13 ] during a calendar year.

      the Secretary of the Treasury shall require a resident or citizen of the United
      States or a person in, and doing business in, the United States, to keep
      records, file reports, or keep records and file reports, when the resident,
      citizen, or person makes a transaction or maintains a relation for any person
      with a foreign financial agency. The records and reports shall contain the
      following information in the way and to the extent the Secretary prescribes:

             (1) the identity and address of participants in a transaction or
             relationship.

             (2) the legal capacity in which a participant is acting.

             (3) the identity of real parties in interest.

             (4) a description of the transaction.

      (b) The Secretary may prescribe—

             (1) a reasonable classification of persons subject to or exempt from
             a requirement under this section or a regulation under this section;

             (2) a foreign country to which a requirement or a regulation under
             this section applies if the Secretary decides applying the requirement
             or regulation to all foreign countries is unnecessary or undesirable;

             (3) the magnitude of transactions subject to a requirement or a
             regulation under this section;

             (4) the kind of transaction subject to or exempt from a requirement
             or a regulation under this section; and

             (5) other matters the Secretary considers necessary to carry out this
             section or a regulation under this section.

      (c) A person shall be required to disclose a record required to be kept under
      this section or under a regulation under this section only as required by law.

31 U.S.C. § 5314.

13 The $10,000 requirement stated in the May 11, 2018 letter and in later correspondence
from the IRS appears to be a reference to 31 C.F.R. § 1010.306(c), a regulation
promulgated pursuant to the Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., which

                                              18
       An FBAR examination is not an income tax examination. However, you may
       be liable for penalties for failure to comply with 31 U.S.C. Section 5314. If
       you’re required to file, you should report information about these foreign
       bank and financial accounts on FinCEN Report 114. You must file the form
       electronically with the Financial Crimes Enforcement Network (FinCEN) on
       or before June 30 of the subsequent year. For example, the FBAR for
       calendar year 2013 was due by June 30, 2014. If you’re required to file an
       FBAR, you must keep certain records for five years.

        According to plaintiffs’ complaint, following the May 11, 2018 letter notifying Mrs.
Jones of the FBAR examination, Mrs. Jones received two assessment letters from the
IRS. Each assessment letter purported to assess a “willful FBAR penalty,” the first letter
assessing a penalty against Mr. Jones, through his estate, and the second letter
assessing a penalty against Mrs. Jones. While the two assessment letters appear in the
same format and reach the same conclusion with respect to willfulness for Mr. Jones and
Mrs. Jones, respectively, the two assessment letters consider different facts or “factors”
as relevant to their respective determinations of willfulness, consider the balances of
different accounts in their calculation of the willful FBAR penalties, calculate different
FBAR penalties, and cover different years of FBAR violations. Moreover, the assessment
letters were received by Mrs. Jones on different dates, months apart, and, as a result,
Mrs. Jones took different approaches to challenging the willful FBAR penalties asserted
in the assessment letters.

       As an initial matter, both assessment letters refer to Keli Kim as the “[p]erson to
contact.” Both assessment letters also include the following information with respect to
appealing the FBAR penalty assessment:

       If you agree

       If you agree to the assessment and collection of the proposed penalties,
       please sign, date, and return the enclosed Form 13449, Agreement to
       Assessment and Collection of Penalties Under 31 USC 5321 (a)(5) and
       5321 (a)(6), in the envelope provided by the response due date, which is 30
       days from the date of this letter. Make your check or money order payable
       to the United States Treasury for the amount indicated on the agreement
       form. If you agree but can’t pay in full, pay what you can with the Form
       13449 by the response due date and we'll send you a bill for the remaining
       amount with information on your payment options. We enclosed Notice
       1330, Information on Making FBAR Penalty Payment by Check.

provides: “Reports required to be filed by § 1010.350 [FBAR reports] shall be filed with
FinCEN on or before June 30 of each calendar year with respect to foreign financial
accounts exceeding $10,000 maintained during the previous calendar year.” 31 C.F.R. §
1010.306(c) (2021) (alteration added).

                                            19
       If you disagree

       If you don’t agree to the assessment and collection of the proposed
       penalties, you can request a conference with our Appeals Office. To do so,
       mail your written protest to the address shown at the top of this letter. Direct
       your letter to the attention of the person listed as the “Person to contact” at
       the top of this letter. We must receive your protest by the response due
       date, which is 30 days from the date of this letter. Include the following in
       your written protest:

              1.   A request for conference;

              2.   Your name, address, and daytime telephone number;

              3.   Your social security number, individual taxpayer identification
                   number, or employer identification number;

              4.   The date and number of this letter;

              5.   The calendar years involved;

              6.   The penalties you’re contesting;

              7.   An explanation of why you contest those penalties, including
                   any reasonable cause explanation;

              8.   All information pertinent to your position;

              9.   If applicable, a statement of law or other authority that you relied
                   on, and how that law or other authority applies to your case; and

              10. The following signed statement: “Under penalties of perjury, I
                  declare that I have examined the facts presented in this
                  statement and any accompanying information, and, to the best
                  of my knowledge and belief, they are true and complete.”

              Note: If you’re a representative submitting a protest on behalf of
              another person, you should substitute a statement that you prepared
              the protest, and that you know personally the statement of facts
              contained in the protest are true and correct. Generally, you can rely
              in good faith on information your client provides. However, you must
              ask reasonable questions if the information appears to be incorrect,
              inconsistent, or incomplete.

(capitalization and emphasis in original).

                                             20
       In addition, each assessment letter was accompanied by a Form 886-A,
“EXPLANATION OF ITEMS,” (capitalization in original), which set forth the facts and
analysis in support of the willful14 FBAR penalty assessments for the taxpayers and tax
years which are the subjects of their respective assessment letters. Plaintiffs identify each
Form 886-A by the name “Revenue Agent Report,” or the acronym “RAR.” The Forms
886-A for Mr. and Mrs. Jones present the same format for analyzing the conduct
concerning their respective accounts. Both Forms 886-A are addressed “[t]o determine
the taxpayer’s willful FBAR penalty pursuant to 31 U.S.C. § 5321(a)(5).” Both Form s 886-
A determine that Mr. and Mrs. Jones “had an FBAR filing requirement,” because Mr. and
Mrs. Jones each “was a U.S. person;” “had a financial account in a foreign country;” “had
a financial interest in the account or signature or other authority over the foreign financial
account; and” because “[t]he aggregate amount in the foreign financial accounts
exceeded $10,000 in U.S. currency at any time during the year.” Both Forms 886-A,
moreover, conclude that Mr. and Mrs. Jones, respectively, do not qualify for a “reasonable
cause” defense because they failed to disclose their foreign accounts to their tax return
preparer and “thereby eliminated a good-faith reliance defense.”

       The first assessment letter, dated July 26, 2018, and accompanying Form 886-A,
were sent by the IRS to the “Estate of Jeffrey L. Jones” and to “Margaret Jones, Executor.”
The first assessment letter states that the IRS was “proposing a penalty” on the estate of
Mr. Jones “for violating the reporting or record keeping requirements for foreign financial
accounts.” The first assessment letter and Form 886-A sent to Mr. Jones’ estate concern
only calendar year 2011. The Form 886-A attached to the first assessment letter analyzes
the values of foreign bank accounts held by Mr. Jones alone and calculates a willful FBAR
penalty based on account values in 2011 only.

       The Form 886-A for Mr. Jones lists the foreign accounts held by Mr. Jones alone
and by Mr. and Mrs. Jones jointly, and identifies two accounts at ANZ Bank, one account
at Heartland Bank, and one account at Morrison Kent as being owned by Mr. Jones alone,
and two accounts at Royal Bank of Canada, three accounts at Bell Gully, and two
accounts at ANZ Bank as being owned by Mr. and Mrs. Jones jointly during the tax year
2011. Despite listing accounts held jointly by Mr. and Mrs. Jones, however, the Form 886-
A for Mr. Jones only considers the accounts owned by Mr. Jones alone in calculating Mr.
Jones’ penalty assessment, as explained below. The Form 886-A for Mr. Jones lists
several factors that “were considered in evaluating the type and extent of FBAR penalties
that are appropriate,” for Mr. Jones alone, including “Knowledge of Foreign Accounts;”
“Foreign Accounts Concealed from US Tax Return Preparer;” “Foreign Accounts
Concealed from Internal Revenue Service;” and “Additional Acts of Concealment.”

14 The parties in their filings with the court use various labels to refer to the IRS’s
determination with respect to the assessment of FBAR penalties against Mrs. Jones and
her late husband, including “willfulness,” “willful blindness,” “recklessness,” and “reckless
disregard.” As discussed below, these ideas are broadly encompassed within the
common law definition of “willfulness” employed by courts when reviewing IRS willfulness
determinations. See, e.g., Landa v. United States, 153 Fed. Cl. 585, 597 (2021).

                                             21
(capitalization and emphasis in original). The Form 886-A for Mr. Jones states, with
respect to “Knowledge of Foreign Accounts:”

      Mr. Jones has a number of foreign bank accounts. Some are believed to
      have been opened by Mr. Jones when he was residing in New Zealand prior
      to moving to Canada in 1952 at the age of 33. Other foreign accounts were
      inherited when his parents died in New Zealand at least 30 years ago. Mr.
      Jones was completely aware of these foreign accounts and their account
      balances as confirmed through statements made by his wife [Mrs. Jones]
      and his property manager/friend [Mrs. Guzman].

      Also, his foreign account statements and documents were mailed either to
      his U.S. residence or to the address of a separate property he owned (Mrs.
      Guzman's address).

(capitalization and emphasis in original; alterations added). With respect to “Foreign
Accounts Concealed from US Tax Return Preparer,” the Form 886-A for Mr. Jones states:

      Mr. Jones has gone to the same US tax preparer for 28 years. During each
      of those years, Mr. Jones failed to initiate any discussion with his US tax
      return preparer, Mr. Burke, regarding the existence of his foreign accounts.

      The New Zealand non-resident tax deduction certificates for at least one of
      Mr. Jones' New Zealand accounts was mailed to the Jones' residence.
      These certificates revealed interest income and New Zealand taxes
      withheld. Those certificates were not disclosed to Mr. Burke.

With respect to “Foreign Accounts Concealed from Internal Revenue Service,” the Form
886-A for Mr. Jones states:

      Mr. Jones' failure to make full disclosure of relevant facts to his return
      preparer directly resulted in causing his return preparer to prepare false US
      tax returns and falsely believe that he (Mr. Jones) did not have an FBAR
      filing requirement.

      Specifically, Mr. Jones caused his return preparer to check the box “No” in
      preparing Part Ill of Form 1040 Schedule B for the year at issue, indicating
      that Mr. Jones did not have an interest in or signature or other authority over
      a foreign financial account. Mr. Jones signed each of the tax returns under
      penalty of perjury.

(capitalization and emphasis in original). With respect to “Additional             Acts of
Concealment,” the Form 886-A for Mr. Jones states:

      Mr. Jones knew or at least should have known that he needed to seek
      advice from knowledgeable tax professionals in the United States. Mr.

                                            22
      Jones clearly did not seek such advice from his U.S. income tax preparer,
      Mr. Burke. It is not known whether he sought advice from any other
      knowledgeable U.S. tax professional. However, Mr. Jones knew that by not
      seeking such advice, he (Mr. Jones) was responsible for the risks and
      consequences for his willful blindness.

      Also, Mr. Jones not only concealed his foreign accounts from his return
      preparer and the IRS, but he also concealed his foreign accounts from his
      wife, children, and the attorney who drafted the Jones Family Living Trust.

      Both Mrs. Jones and their daughter stated that the Jones Family Living
      Trust only included US bank account and properties.

      Also, per the interview with Mrs. Guzman:

          •   Mr. Jones' New Zealand bank documents were mailed to Mrs.
              Guzman's house from sometime in 1980s to 2005. The large
              envelopes came every 6 months.

          •   The New Zealand account representative also left phone messages
              for Mr. Jones at Mrs. Guzman's house. Mr. Jones returned the calls
              from Mrs. Guzman's house.

          •   Mr. Jones told Mrs. Guzman “this is between you and me.”

(capitalization and emphasis in original). Based on these factors, the Form 886-A for Mr.
Jones provides the following analysis:

      Mr. Jones never disclosed to his return preparer of 28 years the fact that he
      had foreign bank accounts. Mr. Jones also never disclosed to his return
      preparer that he had foreign investment income.

      As a direct result of Mr. Jones concealing this information from his return
      preparer, a tax return was prepared that excluded this relevant information.
      Mr. Jones signed the tax return, acknowledging under penalty of perjury that
      the tax return was true, correct and complete.

      Mr. Jones failed to make relevant disclosures to or inquiries of his tax return
      preparer. These actions prevented his return preparer from either providing
      advice on these issues or assisting with finding a more qualified and
      experienced tax professional.

      At best, Mr. Jones was willfully blind regarding his FBAR filing requirements.

     In the “CONCLUSION ” section, the Form 886-A assesses against Mr. Jones a willful
FBAR penalty which, as noted above, is distinct from the Miscellaneous Offshore Penalty

                                            23
already paid by Mrs. Jones. (capitalization and emphasis in original). The Form 886-A for
Mr. Jones states that, because the “Max. Aggregate Balance for ALL Accounts,”
meaning the accounts owned by Mr. Jones alone, was greater than $1,000,000.00, the
“Willful Penalty is the GREATER of” “$100,000 / violation” or “50% of balance at time
of violation.” (capitalization and emphasis in original). The Form 886-A calculates the
willful FBAR penalty at “the statutory maximum of $1,890,074 . . . .” (emphasis in original).
The Form 886-A for Mr. Jones bases this assessment on the “June 30, 2012 Balance” 15
of all foreign bank accounts held by Mr. Jones in 2011, as $3,780,662.00.

        The record before the court indicates that, after Mrs. Jones received the first
assessment letter against Mr. Jones from the IRS, Mrs. Jones sent a pair of letters, at
first challenging and seeking to appeal the IRS’s assessment of a willful FBAR penalty
against Mr. Jones, and ultimately withdrawing any administrative appeal with the intent of
challenging the willful FBAR penalty assessment against Mr. Jones in court. The letters
were filed with the court by the parties. On August 27, 2018, approximately one month
after the first assessment letter, Mrs. Jones sent a letter to the IRS filing an appeal of the
willful FBAR penalty assessed against Mr. Jones, arguing that Mr. Jones’ failure to meet
his FBAR reporting requirements “was unintentional and inadvertent, a good faith
misunderstanding, and certainly not ‘willful’ (under any definition or construction of the
term ‘willfulness’).” According to the record before the court, one month later, on
September 27, 2018, Mrs. Jones, through her attorney, sent a second letter, stating that
her “physical and mental health is deteriorating rapidly,” and for that reason, the letter
stated,

       we hereby withdraw the Protest [with respect to Mr. Jones] and ask that you
       treat the Protest as if it were never submitted. More specifically, we request
       that you proceed with assessing the 50% FBAR Penalty at issue as soon
       as possible so that Mrs. Jones, one of the primary witnesses in this case,
       can contest this matter in a fair, impartial, and hopefully more expeditious
       forum while she is still alive.

(emphasis in original; alteration added).

       The second of the two assessment letters, dated October 22, 2018, and
accompanying Form 886-A, were sent by the IRS to “Margaret J. Jones” in her individual
capacity after Mrs. Jones withdrew her administrative challenge of the willful FBAR
penalty against Mr. Jones. The second assessment letter states that the IRS was
“proposing a penalty” on Mrs. Jones “for violating the reporting or record keeping
requirements for foreign financial accounts.” The assessment letter sent to Mrs. Jones

15 The Forms 886-A for both Mr. and Mrs. Jones appear to base their assessed penalties
on the balance of the accounts concerned on June 30 of the year following the year at
issue; for Mr. Jones, 2011, and for Mrs. Jones, both 2011 and 2012. The use of June 30
appears to be a reference to 31 C.F.R. § 1010.306(c), which requires FBAR reports to
“be filed with FinCEN on or before June 30 of each calendar year with respect to foreign
financial accounts exceeding $10,000 maintained during the previous calendar year.”

                                             24
concerns two “Calendar years,” “2011 & 2012.” The Form 886-A attached to the second
assessment letter analyzes the values of foreign bank accounts held by Mrs. Jones alone
and by Mr. and Mrs. Jones jointly,16 and calculates a willful FBAR penalty based on
account values in both 2011 and 2012.

        The Form 886-A directed to Mrs. Jones states that it covers both tax years 2011
and 2012. The Form 886-A for Mrs. Jones lists the foreign accounts held by Mrs. Jones
alone as well as by Mr. and Mrs. Jones jointly, and identifies two accounts at Royal Bank
of Canada and one account at Bell Gully as being owned by Mrs. Jones individually, and
one account at Royal Bank of Canada, one account at Bell Gully, and two accounts at
ANZ Bank as being owned by Mr. and Mrs. Jones jointly during the tax years 2011 and
2012.17 The Form 886-A for Mrs. Jones lists several factors that “were considered in
evaluating the type and extent of FBAR penalties that are appropriate,” including
“Knowledge of Foreign Accounts;” “Mrs. Jones’ Background, Knowledge & Experience;”
“Foreign Accounts Concealed from US Tax Return Preparer;” “Mrs. Jones’ Selection of
US Tax Return Preparer;” “Foreign Accounts Concealed from Internal Revenue Service;”
and “Certifying Statements made by Mrs. Jones on Streamlined Application.”
(capitalization and emphasis in original). The Form 886-A for Mrs. Jones considers three
factors not considered in the Form 886-A for Mr. Jones, namely “Mrs. Jones’ Background,
Knowledge & Experience,” “Mrs. Jones’ Selection of US Tax Return Preparer;” and
“Certifying Statements made by Mrs. Jones on Streamlined Application.” The Form 886-
A for Mrs. Jones, however, does not consider a factor which was considered by the Form
886-A for Mr. Jones, “Additional Acts of Concealment.” The Form 886-A for Mrs. Jones
states, with respect to “Knowledge of Foreign Accounts:”

      Mrs. Jones has a number of individual and joint foreign bank accounts.
      Some are believed to have been opened by Mr. & Mrs. Jones while residing
      in New Zealand and Canada prior to moving to U.S. Additional New Zealand
      accounts were opened when their son studied in New Zealand in 1973.

      Mrs. Jones was completely aware of these foreign accounts and their
      account balances. She knew that her foreign investments performed “very
      well.” Mrs. Jones also approved and directed foreign investment activities,
      which were communicated via email with account representatives at Bell
      Gully in New Zealand.

16 Neither the Forms 886-A nor the assessment letters indicate why, with respect to Mr.
Jones, only the balances of the accounts held solely in Mr. Jones’ name were used to
calculate the willful FBAR penalty, while with respect to Mrs. Jones, the accounts held
solely in Mrs. Jones’ name and those held jointly by her and Mr. Jones were used to
calculate the willful FBAR penalty.

17 The Forms 886-A do not explain why the Form 886-A for Mr. Jones identifies seven
accounts held jointly by Mr. and Mrs. Jones, while the Form 886-A for Mrs. Jones only
identifies four accounts held jointly by Mr. and Mrs. Jones.

                                           25
(capitalization and emphasis in original). With respect to “Mrs. Jones’ Background,
Knowledge & Experience,” the Form 886-A for Mrs. Jones states:

       By her own admission, Mr. Jones is an educated and knowledgeable
       woman. She worked as a legal secretary for an estate planning law firm for
       many years. She maintained the books and gathered tax records for their
       multiple rental properties. She also made investment decisions and took the
       initiative to have the family trust amended to include herself as a co-trustee.

(emphasis in original). With respect to “Foreign Accounts Concealed from US Tax Return
Preparer,” the Form 886-A for Mrs. Jones states:

       Mrs. Jones has gone to the same US tax preparer for 28 years. During each
       of those years, Mrs. Jones failed to initiate any discussion with her US tax
       return preparer, Mr. Burke, regarding the existence of her foreign accounts.

       The New Zealand non-resident tax deduction certificates for at least one of
       Mrs. Jones’ New Zealand accounts was mailed to the Jones’ residence.
       These certificates revealed interest income and New Zealand taxes
       withheld. Those certificates were not disclosed to Mr. Burke.

       The Canadian statement of amounts paid or credited to non-residents of
       Canada was also mailed to the Jones’ residence. These statements
       reported gross income and zero Canadian taxes withheld. Those
       statements were also not disclosed to Mr. Burke.

       In her Streamline application, Mrs. Jones states that she was “transparent
       and openly communicated with the foreign financial and legal advisors
       regarding the ongoing investments and reinvestments. However, she was
       clearly NOT transparent or open in her communications with her US CPA.
       Additionally, she stated during her interview that the [sic] she did not
       disclose the foreign accounts to her CPA because it was “none of his
       business.” In other words, Mrs. Jones made a deliberate and conscious
       decision to NOT be transparent or open about her foreign accounts.

(capitalization and emphasis in original). With respect to “Mrs. Jones’ Selection of US Tax
Return Preparer,” the Form 886-A for Mrs. Jones states:

       According to Mrs. Jones, her selection of Mr. Burke as the US tax return
       preparer was based on a referral from a co-worker at the law firm where
       she worked. The fact that Mrs. Jones never mentioned the foreign accounts
       to Mr. Burke because they were “none of his business” indicates that Mrs.
       Jones' selection of Mr. Burke as the return preparer was not based on his
       knowledge and experience of the U.S. tax consequences of foreign issues.
       This is further reinforced by the fact that Mr. Burke is indeed not familiar
       with FBAR or foreign income reporting requirements.

                                             26
(emphasis in original). With respect to “Foreign Accounts Concealed from Internal
Revenue Service,” the Form 886-A for Mrs. Jones states:

      Mrs. Jones' failure to make full disclosure of relevant facts to her return
      preparer directly resulted in causing her return preparer to prepare false US
      tax returns and falsely believe that she (Mrs. Jones) did not have an FBAR
      filing requirement.

      Specifically, Mrs. Jones caused her return preparer to check the box “No”
      in preparing Part Ill of Form 1040 Schedule B for the years at issue,
      indicating that Mrs. Jones did not have an interest in or signature or other
      authority over a foreign financial account.

      The ability to respond accurately to that simple, straightforward question on
      Schedule B does not require a background in tax, finance or accounting
      matters. Regardless of what Mrs. Jones may have believed regarding
      foreign taxes withheld or taxability of foreign income to US citizens, she
      cannot dispute the fact that she knew the correct response to this question
      was “Yes.”

      Mrs. Jones admitted that at the completion of the U.S. tax preparation, Mr.
      Burke would go over everything on the return. He would go through the tax
      return page by page, line by line, all income and expenses. Mrs. Jones
      signed each of the tax returns under penalties of perjury, declaring that she
      examined the return and accompanying schedules and statements, and “to
      the best of her knowledge and belief, they are true, correct, and complete.”

(capitalization and emphasis in original). With respect to “Certifying Statements made by
Mrs. Jones on Streamlined Application,” the Form 886-A for Mrs. Jones states:

      “I am a Canadian citizen and a U.S. tax resident. I have been residing in the
      U.S. for many years.”

          •   Mrs. Jones moved to the U.S. on a full time-basis in 1954. At the time
              she made this statement, she had been living in the U.S. for
              approximately 60 years, or approximately 70% of her life.

      “I was under the belief (which I now realize was a misunderstanding, based
      upon subsequent legal advice I received) that unless assets are brought to
      the United States, the income from those foreign assets are not subject to
      U.S. income taxation and would only be taxed in the foreign country where
      the income is earned.”

          •   Mrs. Jones received statements of amounts paid or credited to non-
              resident of Canada on her three Canadian accounts. The statements

                                            27
              indicate gross income was earned but ZERO taxes were withheld.
              Mr. and Mrs. Jones did not file foreign income tax returns. Income
              earned was not taxed in the foreign country where the income was
              earned.

      “Neither I, nor my late husband ever spent or withdrew funds from any of
      the Bank Accounts.”

          •   According to Mrs. Jones' bank records, funds maintained in the
              Royal Bank of Canada accounts were used to pay expenses incurred
              in Canada. Royal Bank of Canada statements also reveal cash
              withdrawals.

      “My husband and I had been filing U.S. federal income tax returns for the
      last several years, but we never reported the interest income generated by
      the Bank Accounts on those returns based upon our erroneous
      understanding of how the U.S. tax laws apply to foreign income.”

          •   Canada, New Zealand and United States residents are all required
              to pay taxes on worldwide income.

      “In short, the facts presented above demonstrate that my understanding of
      the law was a good faith misunderstanding of how United States taxation
      law applies to assets located in the country of origin of immigrants.”

          •   There is no evidence that Mrs. Jones made any "good faith" effort to
              understand US tax laws. She did not tell her US return preparer or
              any other qualified US tax professional.

(capitalization and emphasis in original). Based on these factors, the Form 886-A for Mrs.
Jones provides the following analysis:

      Mrs. Jones never disclosed to her return preparer of 28 years the fact that
      she had foreign bank accounts. Mrs. Jones also never disclosed to her
      return preparer that she had foreign investment income, stating it was “none
      of his business.” In reality, knowing such facts IS a tax return preparer's
      business.

      Mrs. Jones was asked why she checked the box “No” on Schedule B
      regarding foreign accounts. Mrs. Jones replied, “I must have lied.”

      As a direct result of Mrs. Jones intentionally concealing this information from
      her return preparer, a tax return was prepared that excluded this relevant
      information. Mrs. Jones signed the tax return, acknowledging under penalty
      of perjury that the tax return was true, correct and complete.

                                            28
       As a direct result of Mrs. Jones intentionally concealing this information from
       her return preparer, a tax return was prepared that excluded this relevant
       information. Mrs. Jones signed the tax return, acknowledging under penalty
       of perjury that the tax return was true, correct and complete.

       There is no available evidence that Mrs. Jones knew about FBAR filing
       requirements. However, the foreign account balances and foreign income
       were clearly significant enough that the risk of harm for NOT making those
       disclosures was either known or so obvious that it should have been known.

       At best, Mrs. Jones' actions were reckless.

(capitalization and emphasis in original).

        In the “CONCLUSION ” section, the Form 886-A for Mrs. Jones assesses against Mrs.
Jones a willful FBAR penalty which, as noted above, is distinct from the five-percent
Miscellaneous Offshore Penalty which had been already paid by Mrs. Jones.
(capitalization and emphasis in original). The Form 886-A for Mrs. Jones states that,
because the “Max. Aggregate Balance for ALL Accounts,” meaning both the accounts
Mrs. Jones held in her name alone, and also those accounts Mrs. Jones held jointly with
Mr. Jones, is greater than $1,000,000.00, the “Willful Penalty is the GREATER of”
“$100,000 / violation” or “50% of balance at time of violation.” (capitalization and emphasis
in original). The Form 886-A calculates the willful FBAR penalty at “the statutory maximum
of $1,521,940. Prorated, $751,685 for tax year 2011 and $770,255 for tax year 2012.”
(emphasis in original). The Form 886-A bases this assessment on the “June 30, 2012
Balance” on all foreign accounts held by Mrs. Jones alone or jointly with her husband,
$2,970,499.00, and the “June 30, 2013 Balance” of those same accounts, $3,043,880.00.

       On November 21, 2018, Mrs. Jones sent a letter in response to the IRS’s
assessment of a willful FBAR penalty against her. Rather than protesting the willful FBAR
penalty assessment, however, Mrs. Jones stated in her letter a request “that you proceed
as soon as possible with assessing the 50% Willful FBAR Penalty you have proposed
against Mrs. Jones.” The request for an expedited assessment in Mrs. Jones’ November
21, 2018 letter was based on the same concerns for Mrs. Jones’ health as the September
27, 2018 letter requesting an expedited assessment of the willful FBAR penalty against
Mr. Jones. Accordingly, as of November 21, 2018, Mrs. Jones had requested expedited
assessment of both willful FBAR penalties assessed against Mr. Jones and herself.

       Following Mrs. Jones’ letters requesting expedited assessments of the willful
FBAR penalties, Mrs. Jones made a partial payment on each of the two willful FBAR
penalties, and shortly after making each partial payment, requested a refund thereof.
According to plaintiffs’ complaint, “[o]n or around December 10, 2018, the Estate of
Jeffrey L. Jones submitted a FBAR penalty payment of $4,878.95 for the calendar year
2011, and then on December 11, 2018, a claim for a full refund of the same penalty

                                             29
payment.”18 Both letters, one enclosing “a check in the amount of $4,878.95” as partial
payment of the FBAR penalty assessed against Mr. Jones, (emphasis in original), and
one seeking a refund of the same amount, are included in the record before the court.
Plaintiffs further allege that “[o]n or around April 18, 2019, Mrs. Jones submitted a FBAR
penalty payment of $4,972.00 for the calendar years 2011 and 2012, and then on April
19, 2019, a claim for a full refund of the same penalty payment.” 19 Both letters, one
enclosing “a check in the amount of $4,972.00,”20 which Mrs. Jones explained “one half
of which amount is allocable to each of the calendar years at issue (i.e., $2,486 allocable
to calendar year 2011, and $2,486 allocable to calendar year 2012),” (emphasis in
original), and one seeking a refund of the same amount, are included in the record before
the court. In total, Mrs. Jones made partial payments amounting to $9,850.95, against the
$3,412,014.00 which Mr. and Mrs. Jones, combined, owed in willful FBAR penalties.

        Following the assessment and partial payment of the willful FBAR penalties
against Mr. and Mrs. Jones, Mrs. Jones filed complaints in two cases in the United States
District Court for the Central District of California. The first complaint was filed on behalf
of the estate of Jeffrey L. Jones, Jones v. United States, 19-00173-JVS(RAO), and the
parties disagree as to when the complaint was filed, with plaintiffs alleging the complaint
was filed on January 1, 2019, and defendant claiming the complaint was filed on January
8, 2019. On the District Court’s electronic docket, the complaint in the California District

18While plaintiffs’ complaint identifies the estate of Mr. Jones as having “submitted” the
partial payment on the FBAR penalty assessed against Mr. Jones, the check making that
partial payment, which appears in the record before the court, is signed by Mrs. Jones,
and the letter accompanying the check identifies Mrs. Jones, “in her capacity as the
executor of the above-referenced Estate of Jeffrey L. Jones,” as the client of the attorney
who drafted the letter on her behalf.

19 Although the reason for making partial payments on the two willful FBAR penalties is
not stated in plaintiffs’ pleadings or briefs in the above captioned case, in Mrs. Jones’
complaints filed in the Federal District Court for the Central District of California, she
stated:

       Plaintiff [Mrs. Jones] is informed and believes the “assessment” of an FBAR
       penalty by the IRS for the failure to timely file an FBAR, and the payment of
       a portion of such penalty, is a jurisdictional prerequisite for filing this action
       pursuant to 28 U.S.C. § 1346(a)(2) to contest such determination (i.e., a
       civil action against the United States to recover amounts erroneously or
       illegally assessed or collected).

(alteration added).

20 According to the record before the court, the partial payment of $4,972.00 is not related
to a specific foreign account, but rather is a partial payment towards the FBAR penalty
assessed against Mrs. Jones for all foreign accounts owned by her alone or jointly with
her husband during the tax years 2011 and 2012.

                                              30
Court case for the estate of Jeffrey Jones indicates filing on January 8, 2019. The second
complaint filed in the California District Court was filed by Mrs. Jones in her individual
capacity on April 15, 2019, Jones v. United States, 19-04950-JVS(RAO). According to
plaintiffs’ complaint and defendant’s motion to dismiss filed in this court in the above
captioned case, the complaints filed in the District Court for the Central District of
California sought to recover, on a theory of illegal exaction, the partial payments made on
the willful FBAR penalties assessed against Mr. Jones and Mrs. Jones.

         The first complaint, in Jones v. United States, Case No. 19-00173, was filed by
Mrs. Jones as executor of the estate of Mr. Jones, and that complaint concerned the facts
that pertained to the assessment of the willful FBAR penalty against Mr. Jones. The
complaint with respect to Mr. Jones asserted one cause of action, a claim for illegal
exaction of the partial payment made towards Mr. Jones’ willful FBAR penalty. In support
of this claim, Mrs. Jones “allege[d] that Jeffrey’s failure to file an FBAR for the year 2011
was unintentional and inadvertent, a good faith misunderstanding, and certainly not
‘willful’ (under any definition or construction of the term ‘willfulness’)” and that “it was the
Joneses’ mistaken but good faith belief that they would be subject to U.S. income taxation
on such funds only if and when those assets were brought into the United States.”

        The second complaint, in Jones v. United States, Case No. 19-04950, was filed by
Mrs. Jones in her individual capacity, and that complaint concerned the facts that
pertained to the assessment of the willful FBAR penalty against Mrs. Jones. The
complaint with respect to Mrs. Jones asserted one cause of action, a claim for illegal
exaction of the partial payment made towards Mrs. Jones’ willful FBAR penalty. In support
of her claim, Mrs. Jones made substantially the same allegations as she had with respect
to the complaint filed with regard to Mr. Jones, including that the IRS could not find that
Mrs. Jones “had actual knowledge of a duty to file an FBAR for certain investment
accounts she held individually as well as jointly with Jeffrey in Canada and New Zealand
during 2011.” Mrs. Jones further alleged, specifically with respect to herself only, that Mrs.
Jones “timely mailed an individual FBAR for the year 2012” to satisfy her FBAR
requirements for that year. In the complaint with respect to Mrs. Jones, she “allege[d] that
her failure to file an FBAR for the year 2011 was unintentional and inadvertent, a good
faith misunderstanding, and certainly not ‘willful’ (under any definition or construction of
the term ‘willfulness’),” and reiterated that “it was the Joneses’ mistaken but good faith
belief that they would be subject to U.S. income taxation on such funds only if and when
those assets were brought into the United States.”

        As plaintiffs recount in their current complaint filed in the United States Court of
Federal Claims, “[t]he government filed answers and brought counterclaims” in the cases
filed in the Federal District Court in California, defending the assessment of the willful
FBAR penalties and seeking judgment on the unpaid balance of the FBAR penalties
assessed against Mr. and Mrs. Jones. Thereafter, cross-motions for summary judgement
were filed in both plaintiff-initiated cases in the California District Court by Mrs. Jones and
the government. In both of those California District Court cases, Mrs. Jones moved for
summary judgment on the theory that the evidence did not support the determination by
the IRS of willfulness for Mr. or Mrs. Jones. Mrs. Jones argued that the IRS’s determination

                                              31
had been arbitrary and capricious. See Jones v. United States, No. 19-00173, 2020 WL
4390390, at *6 (C.D. Cal. May 11, 2020); Jones v. United States, No. 19-04950, 2020 WL
2803353, at *6 (C.D. Cal. May 11, 2020). The government also moved for summary
judgment in those two California District Court cases, on the grounds that the IRS’s
willfulness determinations for Mr. and Mrs. Jones had been correct and that the assessed
FBAR penalties had been within the statutory maximum. See Jones v. United States,
2020 WL 4390390, at *8-10; Jones v. United States, 2020 WL 2803353, at *9-11. With
respect to both Mr. and Mrs. Jones, the District Court determined that the “evidence
create[d] a genuine dispute of material fact as to whether” Mr. and Mrs. Jones “engaged
in a willful violation,” and, therefore, the District Court denied Mrs. Jones’ motions for
summary judgment with respect to the issue of willfulness. Jones v. United States, 2020
WL 4390390, at *8; Jones v. United States, 2020 WL 2803353, at *8. The District Court
denied in full Mrs. Jones’ motion for summary judgment in the case regarding Mr. Jones,
and granted in part and denied in part Mrs. Jones’ motion for summary judgment in the
case regarding Mrs. Jones. See Jones v. United States, 2020 WL 4390390, at *8; Jones
v. United States, 2020 WL 2803353, at *9. The District Court denied the government’s
cross-motions for summary judgment on the issue of willfulness because a genuine
dispute of material fact existed, see Jones v. United States, 2020 WL 4390390, at *10;
Jones v. United States, 2020 WL 2803353, at *10, but the District Court granted the
government’s cross-motions for summary judgment on the issue of whether the willful
FBAR penalties were assessed within the statutory maximum. See Jones v. United
States, 2020 WL 4390390, at *10; Jones v. United States, 2020 WL 2803353, at *11. In
the case concerning the IRS’s assessment of a willful FBAR penalty against Mrs. Jones
the District Court granted summary judgment to Mrs. Jones on one issue: that the IRS
had arbitrarily and capriciously calculated the willful FBAR penalty against Mrs. Jones by
considering both tax years 2011 and 2012. See Jones v. United States, 2020 WL
2803353, at *8. The Federal District Court in California concluded that since “Mrs. Jones
filed a timely, but incomplete FBAR for 2012,” the FBAR penalty “should have been
calculated with only the 2011 year as the base,” and including the year 2012, therefore,
had been arbitrary and capricious. Id. Whether the IRS had arbitrarily and capriciously
calculated Mr. Jones’ FBAR penalty was not at issue, because the IRS had only assessed
an FBAR penalty against Mr. Jones with respect to 2011.

        Following the California Federal District Court’s rulings on the cross-motions for
summary judgment, the United States filed its own complaint, United States v. Jones,
Case No. 2:20-cv-06173-JVS(RAO), seeking to bring to judgment the willful FBAR
penalties assessed against Mr. and Mrs. Jones. According to defendant, the United
States’

      affirmative suit was filed to ensure that the district court properly had
      jurisdiction given the possibility under Bedrosian v. United States that the
      FBAR penalty might be subject to the Flora full-payment rule, see Bedrosian
      v. United States, 912 F.3d 144, 149-50 and n.1 (3d Cir. 2018), and the Ninth
      Circuit’s decision in Boynton v. United States, which provides that the
      government should initiate suits when there has not been full payment of
      the taxes, see Boynton v. United States, 566 F.2d 50, 56 (9th Cir. 1977).

                                           32
According to defendant’s supplemental brief, “[t]his third suit [in the Federal District Court
in California] did not involve any new issues beyond those raised in the suits filed by Mrs.
Jones.” (alterations added).

         The three District Court cases were subsequently consolidated, and jury trials of
the cases were twice scheduled before the orders for trial were vacated at the onset of
the coronavirus pandemic. Thereafter, Mrs. Jones and the government entered into an
agreement to settle all three District Court cases, and according to plaintiffs’ complaint in
this court, “Mrs. Jones ultimately made a large settlement payment in excess of $1M in
December 2020” to resolve Mr. and Mrs. Jones’ FBAR liabilities. Defendant’s
supplemental brief filed in the above captioned case indicates that Mrs. Jones settled the
FBAR penalties assessed against both Mr. and Mrs. Jones for “$1.3 million,” although
defendant indicates that “[a]t the time of the settlement, the total FBAR penalties owned
[sic], including interest and penalties, was $2,967,365.” According to defendant’s motion
to dismiss in the case currently before this court, on December 21, 2020, Mrs. Jones and
the government filed stipulations to dismiss the complaints filed in the California District
Court, as well as the government’s counterclaims. The three California District Court suits
were terminated on December 21, 2020.

         Only after defendant’s motion to dismiss in the United States Court of Federal
Claims was under consideration, did the court uncover the settlement of, and the potential
relationship of, the District Court proceedings to the more recent case filed in this court.
The parties were asked to address the significance of the three cases filed in the
California District Court, including any overlap between the cases in the District Court and
the issues presented in the above captioned case. Both defendant and plaintiffs assert
that the issues presented in the California District Court cases were distinct from the
issues currently presented in the above captioned case in the United States Court of
Federal Claims. In its supplemental brief, defendant argues that “[t]he issue in the suits
filed in the Central District of California was whether Mr. and Mrs. Jones were willful in
their failure to file FBARs reporting their foreign bank accounts to the Department of the
Treasury.” Defendant argues that the above captioned case is limited to the question of
“whether plaintiffs are entitled to a refund of the Title 26 Miscellaneous Offshore Penalty
(‘MOP’), which is a penalty assessed and collected by the IRS separate from the FBAR
penalty.” Defendant argues that in the above captioned case, “neither Mr. Jones’s nor
Mrs. Jones’s willfulness is relevant or material to the Court’s resolution of this case,” and
states “to the extent Form 14654 constitutes a contract between Mrs. Jones and the
United States, the only issue for this Court to determine is whether the IRS had evidence
of willful conduct to open an examination of FBAR compliance.” (emphasis in original). In
their supplemental brief in this court, plaintiffs also differentiate between the issues
presented in the California Federal District Court cases and the issues in the above
captioned case. Plaintiffs describe the issue presented in the California District Court
cases as “whether the penalties of $3,411,984 were correctly assessed by the
government against Mrs. Jones and the Estate of Mr. Jones. Including the analysis of
whether there was or there was no willful blindness in the Jones’ failure to file FBARs
reporting foreign bank accounts.” By contrast, plaintiffs describe the issue in the above

                                             33
captioned cases as whether the “contract was later breached by the government when it
subsequently assessed other penalties in a total amount of $3,411,984 without a
determination of whether Mrs. Jones had a ‘good faith misunderstanding of the law.’”
Plaintiffs state that “[t]he [California District] Court never made a determination of
willfulness by Mrs. Jones. Nor did the District Court made [sic] a determination whether
Mrs. Jones had a ‘good faith misunderstanding of the law,’ which is the crux of this current
case.” (alterations added). Plaintiffs further state with respect to the above captioned
case:

       the plaintiff [sic] seeks to get a refund of the $156,795 paid to the
       government in accordance with the contract entered into with the
       government. This, because of a breach by the government since at no time
       was there a finding that Mrs. Jones did not have a “good faith
       misunderstanding of the law.”

                                      DISCUSSION

        Margaret J. Jones died on March 11, 2021. Plaintiffs, the executors of her estate,
filed their complaint in this court on April 13, 2021, seeking recovery of the Miscellaneous
Offshore Penalty amounts paid by Mrs. Jones “which have no statutory authority and do
not exist in the law and were illegally exacted or taken from the Plaintiff, and more
specifically Margaret J. Jones prior to her death, in contravention of statutes of the United
States.” The executor plaintiffs were not parties to the three earlier California Federal
District Court cases since Margaret Jones had passed on March 11, 2021, after the three
California Federal District Court cases had been settled. In the case currently before this
court, it appears that plaintiffs seek only to recover the $156,795.26 Miscellaneous
Offshore Penalty paid by Mrs. Jones as part of her participation in the IRS Streamlined
Procedures described above.21 Plaintiffs allege: “the 5% MOP was collected and illegally
exacted without any authority in the law or any statute. Such a penalty does not exist in
any statute; not Title 26 and not Title 31.”

        Plaintiffs’ complaint seeks recovery of the Miscellaneous Offshore Penalty on two
distinct theories, each expressed as alternative causes of action. The first, “COUNT I –
BREACH OF CONTRACT,” alleges that

       [t]he IRS made an offer to Mrs. Jones, she accepted the offer and paid the
       IRS consideration of $156,795.26 along with signing a verified statement of

21As discussed below, in support of their breach of contract claim, plaintiffs challenge the
IRS’s assessment of a willful FBAR penalty against Mrs. Jones. Plaintiffs do not seek to
recover the amount of the willful FBAR penalty paid by Mrs. Jones, however, which Mrs.
Jones previously sought to recover in her suit brought in her individual capacity against
the United States in the Federal Central District of California, Jones v. United States,
Case No. 19-4590. Instead, the damages claimed in plaintiffs’ complaint reflects only the
amount paid by Mrs. Jones as the Miscellaneous Offshore Penalty.

                                             34
       non-willfulness. The government then breached the contract by assessing
       FBAR penalties under a “willful blindness” theory, far above the 5% MOP
       agreed to penalty amount.

(capitalization and emphasis in original). Plaintiffs argue that the Form 14654 contains
the terms of a contract between Mrs. Jones and the IRS, and that when the IRS assessed
willful FBAR penalties against Mrs. Jones, “the IRS breached the terms of their contract
not to assert other penalties which they did, in a total amount of $3,411,984; which cost
her [Mrs. Jones] dearly in attorney fees for litigation brought in the U.S. District Court.”
(alteration added). As noted, plaintiffs do not seek to recover the FBAR payments made
by Mrs. Jones; rather, as plaintiffs state, “[t]he remedy of the estate of the late Mrs. Jones
should be the recovery of the $156,795.”

        Plaintiffs’ second cause of action, “COUNT II – ILLEGAL EXACTION,” alleges that
“[t]here is no legal or statutory authority for” the Miscellaneous Offshore Penalty paid by
Mrs. Jones upon entry into the Streamlined Procedures. (capitalization and emphasis in
original). Plaintiffs argue that while “[t]he IRS refers to the 5% MOP paid by Mrs. Jones
as a ‘Title 26 miscellaneous offshore penalty,’” the Miscellaneous Offshore Penalty “is
nowhere to be found in any statute, not in Title 26 or Title 31.” Accordingly, plaintiffs seek
the return of the $156,795.26 paid to the IRS by Mrs. Jones. Plaintiffs’ illegal exaction
claim, unlike the breach of contract claim, does not challenge the assessment of the willful
FBAR penalty against Mrs. Jones, but rather argues that the Miscellaneous Offshore
Penalty payment made by Mrs. Jones must be returned solely on the basis that no
statutory authority exists for the Miscellaneous Offshore Penalty.

       Plaintiffs describe their request for relief as follows:

       1.     For judgment in the amount of $156,795.26 having been illegally
              exacted from Plaintiff (and/or for a breach of contract by Defendant);

       2.     For pre and post-judgment interest as allowed by law;

       3.     For attorneys’ fees and all costs of suit herein occurred; and

       4.     For such other further relief as the Court may deem just and proper.

       Count I – The Contract Claim

      As noted above, defendant filed a motion to dismiss plaintiffs’ complaint pursuant
to RCFC 12(b)(1) and 12(b)(6), which has been fully briefed. With respect to Count One,
defendant argues that “plaintiffs have failed to state a claim for breach of contract
because Mrs. Jones’s submission of Form 14654 did not create a contract with the IRS,
and even if it had, the IRS did not breach the purported contract.” 22

22 Defendant also contends in a footnote that “Plaintiffs’ allegation that Mrs. Jones was
induced into paying the MOP to avoid an income tax or FBAR audit may be construed as

                                              35
         When examining what must be pled in order to state a claim, a plaintiff need only
state in the complaint “a short and plain statement of the claim showing that the pleader
is entitled to relief.” RCFC 8(a)(2) (2021); see also Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). The United States Supreme Court has stated:

       While a complaint attacked by Rule 12(b)(6) motion to dismiss does not
       need detailed factual allegations, ibid. [Conley v. Gibson, 355 U.S. 41, 47
       (1957)]; Sanjuan v. American Bd. Of Psychiatry and Neurology, Inc., 40
       F.3d 247, 251 (C.A.7 1994), a plaintiff’s obligation to provide the “grounds”
       of his “entitlement to relief” requires more than labels and conclusions, and
       a formulaic recitation of the elements of a cause of action will not do, see
       Papasan v. Allain, 478 U.S. 265, 286 (1986) (on a motion to dismiss, courts
       “are not bound to accept as true a legal conclusion couched as a factual
       allegation”). Factual allegations must be enough to raise a right to relief
       above the speculative level, see 5 C. Wright & A. Miller, Federal Practice
       and Procedure §1216 pp. 235-236 (3d ed. 2004) (hereinafter Wright &
       Miller) (“[T]he pleading must contain something more . . . than . . . a
       statement of facts that merely creates a suspicion [of] a legally cognizable
       right of action”), on the assumption that all the allegations in the complaint
       are true (even if doubtful in fact), see, e.g., Swierkiewicz v. Sorema N.A.,
       534 U.S. 506, 508 n.1 (2002); Neitzke v. Williams, 490 U.S. 319, 327 (1989)
       (“Rule 12(b)(6) does not countenance . . . dismissals based on a judge’s
       disbelief of a complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S.
       232, 236 (1974) (a well-pleaded complaint may proceed even if it appears
       “that a recovery is very remote and unlikely”) . . . . [W]e do not require
       heightened fact pleading of specifics, but only enough facts to state a claim
       that relief that is plausible on its face.

Bell Atl. Corp. v. Twombly, 550 U.S. at 555-56, 570 (footnote and other citations omitted;
omissions in original); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl.
Corp. v. Twombly, 550 U.S. at 555-57, 570); First Mortg. Corp. v. United States, 1961
F.3d 1331, 1339 (Fed. Cir. 2020); Am. Bankers Ass’n v. United States, 932 F.3d 1375,
1380 (Fed. Cir. 2019); Frankel v. United States, 842 F.3d 1246, 1249 (Fed. Cir. 2016);
A&D Auto Sales, Inc. v. United States, 748 F.3d 1142, 1157 (Fed. Cir. 2014); Bell/Heery
v. United States, 739 F.3d 1324, 1330 (Fed. Cir.), reh’g and reh’g en banc denied, (Fed.
Cir. 2014); Kam-Almaz v. United States, 682 F.3d 1364, 1367 (Fed. Cir. 2012) (“The facts
as alleged ‘must be enough to raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).’”
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. at 557)); Totes-lsotoner Corp. v. United
States, 594 F.3d 1346, 1354-55 (Fed. Cir.), cert. denied, 562 U.S. 830 (2010); Bank of
Guam v. United States, 578 F.3d 1318, 1326 (Fed. Cir.) (“In order to avoid dismissal for
failure to state a claim, the complaint must allege facts ‘plausibly suggesting (not merely

one for promissory estoppel,” and that “the Court of Federal Claims lacks jurisdiction to
hear claims based on promissory estoppel.” (citing Durant v. United States, 16 Cl. Ct.
447, 450 (1988)). This argument is not further addressed in either party’s briefs.

                                             36
consistent with)’ a showing of entitlement to relief.” (quoting Bell Atl. Corp. v. Twombly,
550 U.S. at 557)), reh’g and reh’g en banc denied (Fed. Cir. 2009), cert. denied, 561 U.S.
1006 (2010); Cambridge v. United States, 558 F.3d 1331, 1335 (Fed. Cir. 2009) (“[A]
plaintiff must plead factual allegations that support a facially ‘plausible’ claim to relief in
order to avoid dismissal for failure to state a claim.” (quoting Bell Atl. Corp. v. Twombly,
550 U.S. at 570)); Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir.) (“The factual
allegations must be enough to raise a right to relief above the speculative level. This does
not require the plaintiff to set out in detail the facts upon which the claim is based, but
enough facts upon which the claim is based, but enough facts to state a claim to relief
that is plausible on its face.” (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555, 570)),
reh’g denied (Fed. Cir.), cert. denied, 557 U.S. 937 (2009); Christen v. United States, 133
Fed. Cl. 226, 229 (2017); Christian v. United States, 131 Fed. Cl. 134, 144 (2017); Vargas
v. United States, 114 Fed. Cl. 226, 232 (2014); Fredericksburg Non-Profit Hous. Corp. v.
United States, 113 Fed. Cl. 244, 253 (2013), aff’d, 579 F. App’x 1004 (Fed. Cir. 2014);
Peninsula Grp. Capital Corp. v. United States, 93 Fed. Cl. 720, 726-27 (2010); Legal Aid
Soc’y of N.Y. v. United States, 92 Fed. Cl. 285, 292, 298 n.14 (2010).

         When deciding a case based on a failure to state a claim, the court “must accept
as true the factual allegations in the complaint.” Engage Learning, Inc. v. Salazar, 660
F.3d 1346, 1355 (Fed. Cir. 2011); see also Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(“In addition, when ruling on a defendant’s motion to dismiss, a judge must accept as true
all of the factual allegations contained in the complaint.” (citing Bell Atl. Corp. v. Twombly,
550 U.S. at 555–56 (citing Swierkiewicz v. Sorema N. A., 534 U.S. 506, 508 n.1 (2002))));
Scheuer v. Rhodes, 416 U.S. at 236 (“Moreover, it is well established that, in passing on
a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter
or for failure to state a cause of action, the allegations of the complaint should be
construed favorably to the pleader.”), abrogated on other grounds by Harlow v. Fitzgerald,
457 U.S. 800 (1982), recognized by Davis v. Scherer, 468 U.S. 183, 190 (1984); Am.
Bankers Ass’n v. United States, 932 F.3d at 1380 (“In reviewing a motion to dismiss, we
accept as true the complaint’s well-pled factual allegations; however, we are not required
to accept the asserted legal conclusions.” (citing Ashcroft v. Iqbal, 556 U.S. at 678));
Harris v. United States, 868 F.3d 1376, 1379 (Fed. Cir. 2017) (citing Call Henry, Inc. v.
United States, 855 F.3d 1348, 1354 (Fed. Cir. 2017)); United Pac. Ins. Co. v. United
States, 464 F.3d 1325, 1327–28 (Fed. Cir. 2006); Samish Indian Nation v. United States,
419 F.3d 1355, 1364 (Fed. Cir. 2005); Boise Cascade Corp. v. United States, 296 F.3d
1339, 1343 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2002), cert. denied, 538
U.S. 906 (2003).

        With respect to the question raised by plaintiffs in Count One regarding the
existence of a contract, defendant argues that “simply put, Form 14654 is not a contract
with the United States” and that “plaintiffs have failed to allege the basic elements of
contract formation.” Moreover, according to defendant, “the IRS did not intend to be
bound by Mrs. Jones’s self-certification of non-willfulness,” and “the IRS left open the
ability to conduct a complete examination and investigation of” Mrs. Jones. Privity of
contract between a plaintiff and the United States government is required to bring a cause
of action in the United States Court of Federal Claims for express and implied contracts.
See Cienega Gardens v. United States, 194 F.3d 1231, 1239 (Fed. Cir. 1998) (“Under

                                              37
the Tucker Act, the Court of Federal Claims has jurisdiction over claims based on ‘any
express or implied contract with the United States.’ 28 U.S.C. § 1491(a)(1) (1994); We
have stated that ‘[t]o maintain a cause of action pursuant to the Tucker Act that is based
on a contract, the contract must be between the plaintiff and the government.’ Ransom v.
United States, 900 F.2d 242, 244 (Fed. Cir. 1990).”), cert. denied, 528 U.S. 820 (1999);
see also Authentic Apparel Grp., LLC v. United States, 989 F.3d 1008, 1012 (Fed. Cir.
2021); Estes Exp. Lines v. United States. 739 F.3d 689, 693 (Fed. Cir. 2014); Flexfab,
L.L.C. v. United States, 424 F.3d 1254, 1265 (Fed. Cir. 2005) (The “government consents
to be sued only by those with whom it has privity of contract.”); S. Cal. Fed. Sav. & Loan
Ass’n v. United States, 422 F.3d 1319, 1328 (Fed. Cir.) (“A plaintiff must be in privity with
the United States to have standing to sue the sovereign on a contract claim,” but noting
exceptions to this general rule (citing Anderson v. United States, 344 F.3d 1343, 1352
(Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2003); United States v. Algoma
Lumber Co., 305 U.S. 415, 421 (1939))), reh’g and reh’g en banc denied (Fed. Cir. 2005),
cert. denied, 548 U.S. 904 (2006); Erickson Air Crane Co. of Wash. v. United States, 731
F.2d 810, 813 (Fed. Cir. 1984) (“The government consents to be sued only by those with
whom it has privity of contract.”).

       To have privity of contract with the United States government, and, therefore, to
invoke jurisdiction in the United States Court of Federal Claims for an alleged breach of
contract claim, plaintiff “must show that either an express or implied-in-fact contract
underlies [the] claim.” Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir.
1997); see also Park Props. Assocs., L.P. v. United States, 916 F.3d 998, 1002 (Fed. Cir.
2019), cert. denied, 140 S. Ct. 857 (2020). “An express contract “‘must be manifested by
words, either oral or written which contains agreement and/or mutual assent.”’” Frankel
v. United States, 118 Fed. Cl. 332, 335 (2014) (quoting Essen Mall Props. v. United
States, 21 Cl. Ct. 430, 439 (1990), aff’d, 842 F.3d 1246 (Fed. Cir. 2016) (quoting Webster
University v. United States, 20 Cl. Ct. 429, 433 (1990))).

       The elements for both express and implied contracts with the United States are
identical. See Night Vision Corp. v. United States, 469 F.3d 1369, 1375 (Fed. Cir. 2006)
(“The elements of an implied-in-fact contract are the same as those of an oral express
contract.”), cert. denied, 550 U.S. 934 (2007); Hanlin v. United States, 316 F.3d 1325,
1328 (Fed. Cir. 2003) (“Thus, the requirements for an implied-in-fact contract are the
same as for an express contract; only the nature of the evidence differs.”); City of
Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed. Cir. 1998). The required elements
to demonstrate an express or implied contract are: “(1) mutuality of intent to contract; (2)
consideration; and, (3) lack of ambiguity in offer and acceptance,” and (4) “[t]he
government representative whose conduct is relied upon must have actual authority to
bind the government in contract.” Id. (citing City of El Centro v. United States, 922 F.2d
816, 820 (Fed. Cir. 1990), cert. denied, 501 U.S. 1230 (1991)); see also Columbus Reg’l
Hosp. v. United States, 990 F.3d 1330, 1339 (Fed. Cir. 2021); Yifrach v. United States,
145 Fed. Cl. 691, 698 (2019), appeal filed, No. 20-1535 (Fed. Cir. Mar. 6, 2020); Bank of
Guam v. United States, 578 F.3d at 1326 (quoting Trauma Serv. Grp. v. United States,
104 F.3d at 1325); see also Chattler v. United States, 632 F.3d 1324, 1330 (2011) (citing
Trauma Serv. Grp. v. United States, 104 F.3d at 1325); Hanlin v. United States, 316 F.3d

                                             38
at 1328 (citing City of Cincinnati v. United States, 153 F.3d at 1377)); Edwards v. United
States, 22 Cl. Ct. 411, 420 (1991) (citing Essen Mall Props. v. United States, 21 Cl. Ct. at
440; Pac. Gas & Elec. Co. v. United States, 3 Cl. Ct. 329, 339 (1983), aff’d, 738 F.2d 452
(Fed. Cir. 1984); and City of Klawock v. United States, 2 Cl. Ct. 580, 584 (1983), aff'd,
732 F.2d 168 (Fed. Cir. 1984)); see also Total Med. Mgmt., Inc. v. United States, 104
F.3d 1314, 1319 (Fed. Cir.) (“The requirements for a valid contract with the United States
are: a mutual intent to contract including offer, acceptance, and consideration; and
authority on the part of the government representative who entered or ratified the
agreement to bind the United States in contract.” (citations omitted)), reh’g and reh’g en
banc suggestion denied (Fed. Cir.), cert. denied, 522 U.S. 857 (1997); City of Cincinnati
v. United States, 153 F.3d at 1377; San Carlos lrr. & Drainage Dist. v. United States, 877
F.2d 957, 959 (Fed. Cir. 1989); Stanwyck v. United States, 127 Fed. Cl. 308, 312 (2016);
Huntington Promotional & Supply, LLC v. United States, 114 Fed. Cl. 760, 767 (2014);
Eden Isle Marina. Inc. v. United States, 113 Fed. Cl. 372, 492 (2013); Council for Tribal
Emp’t Rights v. United States, 112 Fed. Cl. 231, 243 (2013), aff’d, 556 F. App’x 965
(2014); Biofunction, L.L.C. v. United States, 92 Fed. Cl. 167, 172 (2010); Mastrolia v.
United States, 91 Fed. Cl. 369, 384 (2010) (citing Flexfab, L.L.C. v. United States, 424
F.3d 1254, 1265 (2005)); see also Trauma Serv. Grp. v. United States, 104 F.3d at 1325;
Weeks v. United States, 124 Fed. Cl. 630, 633 (2016); Vargas v. United States, 114 Fed.
Cl. 226, 233 (2014); Prairie Cnty., Mont. v. United States, 113 Fed. Cl. 194, 202 (2013),
aff'd, 782 F.3d 685 (Fed. Cir.), cert. denied, 136 S. Ct. 319 (2015); California Human Dev.
Corp. v. United States, 87 Fed. Cl. 282, 293 (2009), aff’d, 379 F. App’x 979 (Fed. Cir.
2010); Aboo v. United States, 86 Fed. Cl. 618, 629, aff’d, 347 F. App’x 581 (Fed. Cir.
2009); SGS-92-X003 v. United States, 74 Fed. Cl. 637, 653-54 (2007); Arakaki v. United
States, 71 Fed. Cl. 509, 514 (2006), aff’d, 228 F. App’x 1003 (Fed. Cir. 2007); Fincke v.
United States, 230 Ct. Cl. 233, 243-44, 675 F.2d 289, 295 (1982); Russell Corp. v. United
States, 210 Ct. Cl. 596, 608-09 (1976). It is key to contract formation with the government
that, “[t]he law requires that a Government agent who purports to enter into or ratify a
contractual agreement that is to bind the United States have actual authority to do so.”
Monarch Assurance P.L.C. v. United States, 244 F.3d 1356, 1360 (Fed. Cir.), reh’g and
reh’g en banc denied (Fed. Cir. 2001) (citing Trauma Serv. Grp. v. United States, 104
F.3d at 1325). “The corollary is that any party entering into an agreement with the
Government accepts the risk of correctly ascertaining the authority of the agents who
purport to act for the Government . . . .” Id. (citing Federal Crop Ins. Corp. v. Merrill, 332
U.S. 380, 384 (1947); see also Snyder & Assocs. Acquisitions LLC v. United States, 133
Fed. Cl. 120, 126 (2017).

        In this court, plaintiffs allege that the Form 14654 constituted an offer from the
government to Mrs. Jones, which Mrs. Jones accepted by completing and submitting the
Form 14654, and for which Mrs. Jones allegedly paid consideration to the government in
the amount of $156,795.26, as a Miscellaneous Offshore Penalty. In return, plaintiffs
allege, the government promised “not to assert other penalties” against Mrs. Jones for
“failure to report foreign financial assets” on her prior tax returns.

       According to defendant, the “Form 14654 is not a contract with the United States”
and that “[b]y leaving open the IRS’s ability to examine a taxpayer and impose penalties

                                             39
beyond the MOP, the IRS did not intend to be bound by Mrs. Jones’s representations,”
with respect to willfulness. Defendant states, “a contract between Mrs. Jones and the IRS
was not formed,” and “the plain language of the form that Mrs. Jones signed and
submitted indicates that the [sic] Mrs. Jones’s self-certification of non-willfulness was
subject to the potential for examination and additional penalties,” including a later
determination as to whether or not Mrs. Jones’ failures to report had been willful. As stated
in the Form 14654, by her signature Mrs. Jones “recognize[d] that if the Internal Revenue
Service receives or discovers evidence of willfulness, fraud, or criminal conduct, it may
open an examination or investigation that could lead to civil fraud penalties,” including
regarding FBAR penalties. Defendant states that “following the submission of Form
14654, the IRS retained the discretion to examine a taxpayer and assess additional
penalties.” Therefore, defendant argues, “the IRS’s ability to change the terms or end it
at its own discretion, indicates that the IRS did not intend to be bound by the mere
submission of a Form.” (capitalization in original) (citing Landgraf v. United States, 151
Fed. Cl. 326, 334 (2020)).

          Defendant argues that “[w]here the Streamlined Procedures leave open that a
taxpayer’s submissions are subject to review, examination, and potential penalties is
insufficient to constitute an offer.” In support, defendant quotes from a United States Court
of Claims case and two United States Claims Court cases, which were affirmed by the
United States Court of Appeals for the Federal Circuit: Cutler-Hammer, Inc. v. United
States, 441 F.2d 1179, 194 Ct. Cl. 788 (1971), Last Chance Mining Co. v. United States,
12 Cl. Ct. 551 (1987), aff’d, 846 F.2d 77 (Fed. Cir. 1988) (unpublished table decision),
and Girling Health Systems, Inc. v. United States, 22 Cl. Ct. 66 (1990), aff’d, 949 F.2d
1145 (Fed. Cir. 1991). In each of the cases cited by defendant, the claimants argued that
a government program constituted an offer to contract and that, by submitting
documentation required to participate in the programs at issue, the claimants had
accepted an offer from the government and created an enforceable contract. In Cutler-
Hammer, government regulation provided for an application process to purchase silver
from the United States. Despite completing the necessary applications, the claimants
were not approved to purchase silver. See Cutler-Hammer, Inc. v. United States, 194 Ct.
Cl. at 793-94. The Court of Claims in Cutler-Hammer found that “[p]urchasers are simply
invited to make ‘application’ to buy certain quantities of silver,” which “applications were
in turn subject to the approval of the Director of Domestic Gold and Silver Operations . . .
.” Id. at 794. The court determined that “[i]t requires a distortion of plain English to infer
that making an application in conformity with the terms of this Regulation would constitute
an acceptance of an offer whereby the United States intended to bind itself.” Id. at 795.
As the Court of Claims explained, “[t]he only effort to be expended by these plaintiffs was
to fill in the blanks of a Government prepared form. They were not invited to accept by
performance.” Id. at 796. In Girling Health Systems, a corporate plaintiff brought a claim
for breach of contract on the grounds that the plaintiff had completed an IRS application
to change corporate status in exchange for the government’s promise to notify plaintiff
within 60 days of the acceptance or rejection of the application, and the government failed
to meet that deadline. Girling Health Sys., Inc. v, United States, 22 Cl. Ct. at 69. The court
in Girling Health Systems stated “that mere solicitations, invitations or instructions from
the Government are not offers to contract that bind the Government upon plaintiff's

                                             40
completion of a form, even when the solicitations, invitations or instructions are embodied
in a statute or regulation.” Id. at 72. In Last Chance Mining Co., a corporation which
“owned a fifty percent interest in unpatented lode mining claims” sought to comply with
the requirements of the Federal Land Policy and Management Act, 43 U.S.C. §§ 1701-
82, to record its interests in the mining claims. Last Chance Min. Co. v. United States, 12
Cl. Ct. at 552-53. Pursuant to the statutory requirements for recording its interests, the
corporation sent the Bureau of Land Management “(a) a statement of ownership; (b) a
plot or map delineating the claims; and (c) a supplemental claim map of the Pioneer
claims, Copper Basic Area in Bald Mountain.” Last Chance Min. Co. v. United States, 12
Cl. Ct. at 553. The plaintiff in Last Chance Mining sued for breach of contract when the
government’s alleged failure to file plaintiff’s documents resulted in the loss of plaintiff’s
interest to a competitor. See id. at 555. In Last Chance Mining, the court rejected plaintiff’s
argument that the filing requirements constituted an offer to contract, stating:

       The statutes and regulations here in question do not purport, even by
       implication, to constitute an offer. While in the broadest sense, the FLPMA
       is an “offer” to allow proof of claims, it is certainly not an offer to contract. It
       is more accurately characterized as a unilateral ultimatum on the part of the
       Government. It would do violence to traditional contract theory, not to
       mention the operation of government, to hold that any statute requiring
       some action by a citizen to obtain a benefit or protect a right constituted an
       open offer to contract. The court concludes that Last Chance does not state
       facts upon which a contract can be predicated.

Last Chance Min. Co. v. United States, 12 Cl. Ct. at 556 (emphasis in original; footnote
omitted). Although instructive, the facts and conclusions of the cases relied upon by
defendant differ from Mrs. Jones’ dealings with the IRS. As noted above, the Form 14654
which Mrs. Jones signed, by its own terms, did not commit the IRS to accepting an
applicant’s representations of that person’s own determination of a lack of willfulness as
a final determination of liability and included a provision stating the IRS could conduct
further examination of Mrs. Jones regarding willfulness.

       Plaintiffs, however, respond that all four elements required to allege a contract with
the government are present in the allegations in their complaint and the facts related to
Mrs. Jones’ participation in the IRS’s Streamlined Procedures. Plaintiffs state:

       (1) both the government and the taxpayer intended to enter into this
       agreement, the government set forth Form 14654 and Mrs. Jones agreed
       to the specific terms; (2) with Form 14654 and the SFCP [Streamlined
       Procedures] the government established an offer and by completing and
       signing such Form, Mrs. Jones accepted the offer; (3) the agreement itself
       states that “in consideration of the IRS’s agreement not to assert other
       penalties” Mrs. Jones consented to immediate assessment and collection
       of the MOP, she paid $156,795.26; and (4) the IRS issued Form 14654
       under the powers the IRS has to “administer, manage, conduct, direct and

                                               41
       supervise the execution and application of the internal revenue laws,” to
       create programs like the SFCP.

(quoting I.R.C. § 7803(a)(2)(A)). Further, plaintiffs, choosing to acknowledge only certain
words of the agreement and to ignore others, argue that “[w]hile it is true that Form 14654
subjects the agreement to the possibility that the IRS may conduct a full examination of
a taxpayer who used the procedure, this is merely another term of the contract.” According
to plaintiffs, rather than preventing proper consideration sufficient to support the contract,
the government’s reservation of examination “merely provides another condition of the
contract and as part of the consideration, the taxpayer is to not have committed willful,
fraudulent or criminal conduct,” which plaintiffs argue that Mrs. Jones did not do.

       As stated above, contract formation “requires (1) mutuality of intent to contract; (2)
consideration; and, (3) lack of ambiguity in offer and acceptance,” City of Cincinnati v.
United States, 153 F.3d at 1377, as well as (4) “[t]he government representative whose
conduct is relied upon must have actual authority to bind the government in contract.” Id.
The language of the Form 14654, upon which plaintiffs rely to argue for the existence of
a contract, and which Mrs. Jones signed, explicitly states:

       In consideration of the Internal Revenue Service’s agreement not to assert
       other penalties with respect to my failure to report foreign financial assets
       as required on FBARs or Forms 8938 or my failure to report income from
       foreign financial assets, I consent to the immediate assessment and
       collection of a Title 26 miscellaneous offshore penalty for the most recent
       of the three tax years for which I am providing amended income tax returns.

The specific language of Form 14654 by its terms explicitly reserves the ability for the IRS
to conduct further examination and assess additional penalties if Mrs. Jones’ behavior
was found to be willful after examination. When Mrs. Jones signed the Form 14654, she
also agreed to the following language included in the Form 14654, which states: “I
recognize that if the Internal Revenue Service receives or discovers evidence of
willfulness, fraud, or criminal conduct, it may open an examination or investigation that
could lead to civil fraud penalties, FBAR penalties, information return penalties, or even
referral to Criminal Investigation.” (capitalization in original). Moreover, the Form 14654
explicitly reserves to the IRS the right to conduct such an examination and assess further
penalties without regard to the previous amount paid as the Miscellaneous Offshore
Penalty and without indicating in the Form 14654 the amount or extent as to which
penalties may be assessed following such an examination and finding of willfulness.
Moreover, while the Form 14654 requires the applicant to make representations to the
IRS regarding the applicant’s willfulness in failing to report foreign financial assets, the
IRS’s reservation of the right to further examine the conduct of the applicant does not bind
the IRS to the applicant’s representations.

        The terms of the Form 14654 indicate that mutual intent to enter into a binding,
final contract was not present between the IRS and Mrs. Jones. Mutual intent to contract
requires “the existence of an offer and a reciprocal acceptance,” Anderson v. United

                                             42
States, 344 F.3d at 1353, an offer, in turn, shown by “‘the manifestation of willingness to
enter into a bargain, so made as to justify another person in understanding that his assent
to that bargain is invited and will conclude it.’” Id. (quoting Restatement (Second) of
Contracts § 24 (1981)). By providing in the Form 14654 that the IRS could “open an
examination” into Mrs. Jones, with the explicit possibility of assessing FBAR penalties as
a result, the IRS reserved its right to conduct an examination and assess further penalties
after Mrs. Jones’ completion of the Form 14654. This reservation does not evidence a
“‘manifestation of willingness to enter into a bargain’” with finality on behalf of the IRS, nor
does it “‘justify’” Mrs. Jones’ belief, as alleged by plaintiffs, that her “‘assent’” had
“‘conclude[d]’” such a “‘bargain,’” id. (quoting Restatement (Second) of Contracts § 24
(1981)), binding the IRS “not to assert other penalties,” as alleged in plaintiffs’ complaint.

        With respect to the element of consideration, the terms of the Form 14654 which
Mrs. Jones signed indicate that, rather than bargaining for a final exchange at the time
Mrs. Jones paid the penalty, Mrs. Jones “recognize[d] that if the” IRS were to “discover[]
evidence of willfulness, fraud, or criminal conduct,” the IRS could “open an examination
or investigation” of Mrs. Jones’ tax liabilities and assets for potential penalties, including
FBAR penalties. The language of the Form 14654 indicates that rather than a binding
“agreement not to assess other penalties,” as alleged by plaintiffs, the IRS gave Mrs.
Jones the opportunity to try to resolve her tax obligations with limited penalties as a result
of her failure to report foreign bank accounts, but the IRS did not renounce a later possible
penalty for an examination into and a finding of “willfulness, fraud, or criminal conduct” on
the part of Mrs. Jones. Plaintiffs, therefore, cannot demonstrate that the penalty Mrs.
Jones had previously paid as the Miscellaneous Offshore Penalty constituted sufficient
consideration necessary to support a contract with the IRS under the terms of the Form
14654. Because plaintiffs in the case currently before the court have not alleged the
elements of either mutual intent to contract or consideration, plaintiffs have not
demonstrated the requirements of a contract with the United States. Accordingly, the
court dismisses Count One of plaintiffs’ complaint alleging breach of contract for failure
to state a claim.

        Defendant further maintains that even if Mrs. Jones had entered into a contract
with the government, “plaintiffs have failed to identify a breach of the purported contract.”
The question of breach of contract is one of contract interpretation. “Contract
interpretation starts with the language of the contract.” SUFI Network Servs., Inc. v.
United States, 785 F.3d 585, 593 (Fed. Cir. 2015); see also NOAA Maryland, LLC v.
Adm’r of Gen. Servs. Admin., 997 F.3d 1159, 1165 (Fed. Cir. 2021); Authentic Apparel
Grp., LLC v. United States, 989 F.3d at 1014; Premier Office Complex of Parma, LLC v.
United States, 916 F.3d 1006, 1011 (Fed. Cir. 2019) (citing NVT Techs., Inc. v. United
States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)); Precision Pine & Timber, Inc. v. United
States, 596 F.3d 817, 824 (Fed. Cir. 2010), cert. denied, 562 U.S. 1178 (2011); Bell/Heery
v. United States, 739 F.3d at 1331; LAI Servs., Inc. v. Gates, 573 F.3d 1306, 1314 (Fed.
Cir.), reh’g denied (Fed. Cir. 2009); Barron Bancshares, Inc. v. United States, 366 F.3d
1360, 1375 (Fed. Cir. 2004); Foley Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir.
1993); HCIC Enters., LLC v. United States, 147 Fed. Cl. 118, 124 (2020); Nw. Title
Agency, Inc. v. United States, 126 Fed. Cl. 55, 57-58 (2016) (citing Foley Co. v. United

                                              43
States, 11 F.3d at 1034) (“The starting point for any contract interpretation is the plain
language of the agreement.”), aff’d, 855 F.3d 1344 (Fed. Cir. 2017); Beard v. United
States, 125 Fed. Cl. 148, 158 (2016); Eden Isle Marina, Inc. v. United States, 113 Fed.
Cl. at 483-84.

         “‘“In contract interpretation, the plain and unambiguous meaning of a written
agreement controls.”’” Arko Exec. Servs., Inc. v. United States, 553 F.3d 1375, 1379 (Fed.
Cir. 2009) (quoting Hercules Inc. v. United States, 292 F.3d 1378, 1380-81 (Fed. Cir.),
reh’g and reh’g en banc denied (Fed. Cir. 2002) (quoting Craft Mach. Works, Inc. v. United
States, 926 F.2d 1110, 1113 (Fed. Cir. 1991))). “Terms must be given their plain meaning
if the language of the contract is clear and unambiguous.” SUFI Network Servs., Inc. v.
United States, 785 F.3d at 593 (citing Coast Fed. Bank, FSB v. United States, 323 F.3d
1035, 1038 (Fed. Cir. 2003)); see also Canpro Invs. Ltd. v. United States, 130 Fed. Cl.
320, 347, recons. denied, 131 Fed. Cl. 528 (2017); Beard v. United States, 125 Fed. Cl.
at 158 (“If the contract language is unambiguous, then it must be given its plain and
ordinary meaning . . . .”). The United States Court of Appeals for the Federal Circuit stated
in Massie v. United States:

       In interpreting a contract, “[w]e begin with the plain language.” “We give the
       words of the agreement their ordinary meaning unless the parties mutually
       intended and agreed to an alternative meaning.” In addition, “[w]e must
       interpret the contract in a manner that gives meaning to all of its provisions
       and makes sense.”

Massie v. United States, 166 F.3d 1184, 1189 (Fed. Cir. 1999) (quoting McAbee Constr.,
Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir.), reh’g denied and en banc suggestion
declined (Fed. Cir. 1996) (internal citations omitted)); Jowett, Inc. v. United States, 234
F.3d 1365, 1368 (Fed. Cir. 2000) (quoting McAbee Constr., Inc. v. United States, 97 F.3d
at 1435; and Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed. Cir. 1998));
Harris v. Dep’t of Veterans Affairs, 142 F.3d at 1467; see also Coast Prof’l, Inc. v. United
States, 828 F.3d 1349, 1354 (Fed. Cir. 2016); Shell Oil Co. v. United States, 751 F.3d
1282, 1305 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2014); McHugh v. DLT Sols., Inc.,
618 F.3d 1375, 1380 (Fed. Cir. 2010); Giove v. Dep’t of Transp., 230 F.3d 1333, 1340-41
(Fed. Cir. 2000) (“In addition, we must interpret the contract in a manner that gives
meaning to all of its provisions and makes sense. Further, business contracts must be
construed with business sense, as they naturally would be understood by intelligent men
of affairs.” (citations omitted)); Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed.
Cir. 1991) (indicating that a preferable interpretation of a contract is one that gives
meaning to all parts of the contract rather than one that leaves a portion of the contract
“useless, inexplicable, void, or superfluous”). A Judge of the United States Court of
Federal Claims has explained:

       “The words of a contract are deemed to have their ordinary meaning
       appropriate to the subject matter, unless a special or unusual meaning of a
       particular term or usage was intended, and was so understood by the
       parties.” Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 322

                                             44
       (Fed. Cir. 1997). “Under general rules of contract law we are to interpret
       provisions of a contract so as to make them consistent.” Abraham v.
       Rockwell Int’l Corp., 326 F.3d 1242, 1251 (Fed. Cir. 2003). “[A]n agreement
       is not to be read in a way that places its provisions in conflict, when it is
       reasonable to read the provisions in harmony. . . . [T]he provisions must be
       read together in order to implement the substance and purpose of the entire
       agreement.” Air-Sea Forwarders, Inc. v. United States, 166 F.3d 1170, 1172
       (Fed. Cir. 1999). “A reasonable interpretation must assure that no contract
       provision is made inconsistent, superfluous, or redundant.” Medlin Const.
       Grp., Ltd. v. Harvey, 449 F.3d 1195, 1200 (Fed. Cir. 2006) (internal
       quotation marks omitted).

Dynetics, Inc. v. United States, 121 Fed. Cl. 492, 512 (2015); see also Marquardt Co. v.
United States, 101 Fed. Cl. 265, 269 (2011) (“In interpreting contractual language, the
court must give reasonable meaning to all parts of the contract and avoid rendering
portions of the contract meaningless.” (citation omitted)).

       While plaintiffs’ Count One alleges that the United States breached its contract
with Mrs. Jones, plaintiffs’ complaint is unclear as to the exact nature of the alleged
breach. In particular, plaintiffs’ complaint does not specify whether the United States
breached its contract with Mrs. Jones by assessing a willful FBAR penalty against Mrs.
Jones or whether the United States breached its contract by assessing willful FBAR
penalties against both Mr. and Mrs. Jones. Plaintiffs’ allegations relating to the claimed
breach of contract largely relate to Mrs. Jones’ alleged “good faith misunderstanding of
the law” or lack of willfulness. The complaint states:

       The government lured Mrs. Jones in based upon the IRS promise and the
       explicit provisions of the contract, that by its terms required some error of
       the taxpayer to be reflected on the tax return, a failure to report foreign
       financial assets. They then later switched their position and alleged her
       good faith misunderstanding of the law was irrelevant and she should be
       strictly liable for other “willfully blind” penalties beyond the 5% MOP penalty
       set forth in the contract.

The complaint further states:

       The government breached its contract with Mrs. Jones by subsequently
       finding after a very long and detailed income tax and FBAR audit that
       although the government actually owed a refund of income tax of
       $15,872.00[23 ] to Mrs. Jones (and the IRS found no Title 26 penalties of any

23 In both the complaint and in plaintiffs’ response to defendant’s motion to dismiss,
plaintiffs refer to a “tax refund” “for the tax year 2013 of $15,872.00” at multiple points.
This tax refund, which appears to have been paid by the IRS to Mrs. Jones, is not
otherwise documented in the record before the court and, in the record before the court,
does not appear to be related to the willful FBAR penalty assessed against Mr. Jones,

                                             45
       kind were applicable); the government nevertheless assessed other
       penalties in a total amount of $3,411,984. In assessing these Title 31
       penalties, the government breached the terms of their own contract by later
       asserting Mrs. Jones’s good faith misunderstanding of the law (an exacting
       requirement of the written terms of the contract) was irrelevant; i.e., her “ . .
       . negligence, inadvertence, or mistake or conduct that [was] . . . the result
       of [her] a good-faith misunderstanding of the law . . .”; “ . . . is irrelevant. .
       .”

(all capitalization, emphasis, punctuation, and quotations in original; alterations in original
except footnote added). The complaint additionally states:

       The RAR[24 ] in support of the proposed FBAR assessment against Mrs.
       Jones stated that “[t]here is no available evidence that Mrs. Jones knew
       about FBAR filing requirements,” but concludes that “the foreign account
       balances and foreign income were clearly significant enough that the risk of
       harm for NOT making these disclosures was either known or so obvious
       that it should have been known.”

(capitalization in original; alterations in original except footnote added).

       Count One of the complaint further asserts:

       The IRS made an offer to Mrs. Jones, she accepted the offer and paid the
       IRS consideration of $156,795.26 along with signing a verified statement of
       non-willfulness. The government then breached the contract by assessing
       FBAR penalties under a “willful blindness” theory, far above the 5% MOP
       agreed to penalty amount.

         Plaintiffs allege that “the government breached the terms of their own contract by
later asserting” that “Mrs. Jones’s good faith misunderstanding of the law . . . was
irrelevant,” to the alleged contract, when the IRS nonetheless found Mrs. Jones’ actions
“willful.” At times, plaintiffs’ complaint in this court also appears to conflate and combine
the willful FBAR penalty assessed against Mr. Jones and the willful FBAR penalty
assessed against Mrs. Jones, as when the complaint states that “the IRS breached the
terms of their contract not to assert other penalties which they did, in a total amount of
$3,411,984,” an amount which appears to reflect the addition of Mr. Jones’ $1,890,074.00
willful FBAR penalty to Mrs. Jones’ $1,521,940.00 willful FBAR penalty. Plaintiffs’
complaint states the combined value of the two willful FBAR penalties as $3,411,984.

which was assessed with respect to tax year 2011, or the willful FBAR penalty assessed
against Mrs. Jones, which was assessed with respect to the tax years 2011 and 2012.

24As noted above, “Revenue Agent Report” or “RAR” is plaintiffs’ designation for the
Forms 886-A which accompanied the assessment letters sent to Mr. and Mrs. Jones and
which set forth the IRS’ determinations of willfulness with respect to Mr. and Mrs. Jones.

                                              46
Plaintiffs’ complaint, however, misstates the amount of the willful FBAR penalty assessed
against Mrs. Jones as “$1,521,910,” when the actual amount of the willful FBAR penalty
indicated on the Form 886-A for Mrs. Jones, discussed above, was $1,521,940.00, a
difference of thirty dollars. An addition of the willful FBAR penalties as provided on the
Forms 886-A, $1,890,074.00 for Mr. Jones and $1,521,940.00 for Mrs. Jones, yields a
total of $3,412,014.00. To add further confusion, while the figure $3,411,984.00 appears
in the complaint in reference to the “other penalties” the government assessed in the
alleged breach of the contract in the current suit filed in this court, plaintiffs have sought
only to recover $156,795.26, as noted above, the amount of the Miscellaneous Offshore
Penalty paid by Mrs. Jones only in her individual capacity. Similarly, in plaintiffs’
complaint, plaintiffs refer to multiple “penalties” rather than a single “penalty” when
discussing the government’s alleged breach of contract, as when the complaint states
that the government “breached the contract by assessing FBAR penalties” for willfulness.
Plaintiffs’ complaint also states that the government had argued in prior proceedings that
“the only requirement was not whether Mrs. Jones (or her late husband) had ‘. . . a good-
faith misunderstanding of the requirements of the law,’” (emphasis and punctuation in
original), even though Mrs. Jones did not enter into the Streamlined Procedures on behalf
of the estate of Mr. Jones. As noted above, the text of Form 14654, which Mrs. Jones
signed, refers only to herself and states: “I recognize that if the Internal Revenue Service
receives or discovers evidence of willfulness, fraud, or criminal conduct, it may open an
examination or investigation that could lead to civil fraud penalties, FBAR penalties,
information return penalties, or even referral to Criminal Investigation.”

        Defendant argues in its motion to dismiss, “the IRS opened an examination of Mrs.
Jones’s income tax and FBAR compliance and asserted willful penalties. Because the
IRS took action that, by the express terms of the Form 14654, it was permitted to do, the
IRS did not breach the purported contract.” As to any possible breach in this case,
defendant further argues that “[t]he IRS’s evidence and analysis provides a prima facie
basis for the imposition of the willful FBAR penalty based on reckless disregard,” such
that the government could not have breached its purported obligations under the contract
alleged by plaintiffs because such penalties were contemplated by the contract’s terms.
Plaintiffs, however, allege that the IRS’s assessment of willful FBAR penalties was not
based on sufficient evidence to demonstrate “willfulness, fraud, or criminal conduct” on
the part of Mr. and Mrs. Jones. Regardless, with respect to these arguments offered by
defendant in its motion to dismiss, the plaintiffs’ allegations of a breach of contract do not
come into consideration in this case because, as concluded above, no contract came into
existence. Nonetheless, to finally speak to the issue of willfulness on the part of Mr. and
Mrs. Jones after four lawsuits regarding their tax liabilities regarding their foreign bank
accounts, the court briefly addresses the willfulness issues surrounding Mrs. Jones’
actions. The court notes, as to the issue of whether the IRS was correct in its
determination that Mrs. Jones was willful in her failure to file FBARs, according to the
publicly available Opinions of the California District Court ruling on the parties’ cross-
motions for summary judgment in the California District Court case with respect to Mrs.
Jones, this is the second time that a challenge has been initiated to the determination of
Mrs. Jones’ willfulness. See Jones v. United States, 2020 WL 2803353, at *6 (“Mrs. Jones
argues that the IRS wrongfully determined that Mrs. Jones acted willfully and argues that

                                             47
willfulness requires a ‘voluntary, intentional violation of a known legal duty’ or conscious
effort to avoid learning about FBAR requirements.”). Plaintiffs, however, argue that the
California Federal District Court “never reached a conclusion on willfulness in this prior
case.”

       In defendant’s reply brief in support of its motion to dismiss the current case in this
court, more importantly, defendant argues:

       At all events, plaintiffs cannot now contest the IRS determination that Mrs.
       Jones acted recklessly or with willful blindness in failing to file FBARs. Mrs.
       Jones had the opportunity to litigate her willfulness in the district court case.
       Instead, she decided to pay a $1.3 million FBAR penalty to settle the district
       court case. (Pls.’ Resp. at 6.) Her opportunity to contest whether the IRS
       was justified in asserting the willful FBAR penalty for her reckless disregard
       of her obligation to file the FBAR expired when she agreed to settle the
       district court case.

(footnote omitted).

       The background regarding the issue of the IRS’s determination that Mrs. Jones
had acted willfully when she failed to disclose her own and her husband’s foreign bank
account income, starts with the Bank Secrecy Act. See 31 U.S.C. §§ 5314, 5321(a)(5)(C)-
(D) (2018). The Bank Secrecy Act requires the submission of foreign account reports, but
“does not define the term willful” for failure to disclose. See Landa v. United States, 153
Fed. Cl. at 597. The regulation under which FBAR penalties are assessed similarly does
not define “willfulness.” See 31 C.F.R. § 1010.350 (2018). Instructive, however, are the
comments of the United States Supreme Court in Safeco Insurance Company of America
v. Burr, 551 U.S. 47 (2007), explaining the use of the term “willfully” in certain other
contexts:

       We have said before that “willfully” is a “word of many meanings whose
       construction is often dependent on the context in which it appears,” Bryan
       v. United States, 524 U.S. 184, 191, 118 S. Ct. 1939, 141 L. Ed. 2d 197
       (1998) (internal quotation marks omitted); and 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, see
       McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132–133, 108 S. Ct. 1677,
       100 L. Ed. 2d 115 (1988) (“willful,” as used in a limitation provision for
       actions under the Fair Labor Standards Act, covers claims of reckless
       violation); Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 125–126,
       105 S. Ct. 613, 83 L. Ed. 2d 523 (1985) (same, as to a liquidated damages
       provision of the Age Discrimination in Employment Act of 1967); cf. United
       States v. Illinois Central R. Co., 303 U.S. 239, 242–243, 58 S. Ct. 533, 82
       L. Ed. 773 (1938) (“willfully,” as used in a civil penalty provision, includes
       “‘conduct marked by careless disregard whether or not one has the right so
       to act’” (quoting United States v. Murdock, 290 U.S. 389, 395, 54 S. Ct. 223,

                                              48
      78 L. Ed. 381 (1933))). This construction reflects common law usage, which
      treated actions in “reckless disregard” of the law as “willful” violations. See
      W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law
      of Torts § 34, p. 212 (5th ed. 1984) (hereinafter Prosser and Keeton)
      (“Although efforts have been made to distinguish” the terms “willful,”
      “wanton,” and “reckless,” “such distinctions have consistently been ignored,
      and the three terms have been treated as meaning the same thing, or at
      least as coming out at the same legal exit”). The standard civil usage thus
      counsels reading the phrase “willfully fails to comply” in [15 U.S.C.] §
      1681n(a) as reaching reckless FCRA [Fair Credit Reporting Act] violations,
      and this is so both on the interpretive assumption that Congress knows how
      we construe statutes and expects us to run true to form, see Commissioner
      v. Keystone Consol. Industries, Inc., 508 U.S. 152, 159, 113 S. Ct. 2006,
      124 L. Ed. 2d 71 (1993), and under the general rule that a common law term
      in a statute comes with a common law meaning, absent anything pointing
      another way, Beck v. Prupis, 529 U.S. 494, 500–501, 120 S. Ct. 1608, 146
      L. Ed. 2d 561 (2000).

Safeco Ins. Co. of Am. v. Burr, 551 U.S. at 57-58. While the Supreme Court’s decision in
Safeco Insurance was not made in the context of tax law, the common law definition of
“willfulness” articulated in Safeco Insurance has been relied upon previously by judges of
the United States Court of Appeals for the Federal Circuit and the United States Court of
Federal Claims when evaluating FBAR penalties assessed for “willfulness.” See, e.g.,
Norman v. United States, 942 F.3d 1111, 1115 (Fed. Cir. 2019) (holding “that willfulness
in the context of [31 U.S.C.] § 5321(a)(5)(C) includes recklessness”) (citing Bedrosian v.
United States, 912 F.3d at 152-53, and United States v. Williams, 489 F. App’x 655, 658-
59 (4th Cir. 2012)); Landa v. United States, 153 Fed. Cl. at 597; Kimble v. United States,
141 Fed. Cl. 373, 385 (2018); Norman v. United States, 138 Fed. Cl. 189, 191-92 (2018).
The Federal Circuit stated, in a footnote in Kimble v. United States, that the taxpayer’s

      reasons for the violation (her subjective belief about the need for secrecy,
      advice from her ex-husband, etc.) do not alter our inquiry. A taxpayer can
      be “willful” even if her violation has good reason. See Bedrosian v. United
      States, 912 F.3d 144, 153 (3d Cir. 2018) (inquiring into “subjective
      motivations and the overall ‘egregiousness’ of [the taxpayer’s] conduct . . .
      is not required to establish willfulness in this context”); Norman, 942 F.3d at
      1116 (“Actions can be willful even if taken on the advice of another.”). And
      there is no “reasonable cause” exception for willful violations. 31 U.S.C. §
      5321(a)(5)(C)(ii).

Kimble v. United States, 991 F.3d 1238, 1243 n.2 (Fed. Cir. 2021).

        Applying the definition of “willfulness” expressed in Safeco Insurance, which
includes the concept of recklessness, to evaluate an assessment of willful FBAR penalties
by the IRS, the Federal Circuit in Kimble v. United States determined that when a taxpayer
“knew about the numbered [foreign] account and took efforts to keep it secret by, among

                                            49
other things, not disclosing the account to her accountant,” those facts would support a
determination of willfulness. Kimble v. United States, 991 F.3d at 1243 (alteration added).
The Federal Circuit in Norman v. United States stated that a determination of willfulness
does not “require[] a showing of actual knowledge of the obligation to file an FBAR,” but
“an FBAR violation would generally not be willful where a taxpayer did not know about,
and had no reason to know about, her overseas account.” Norman v. United States, 942
F.3d at 1115. The Federal Circuit in Norman further found willfulness when a taxpayer
“signed her 2007 tax return under penalty of perjury, and this return falsely indicated that
she had no interest in any foreign bank account,” despite questions from her accountant
“that specifically asked whether she had a foreign bank account.” Id. at 1116. The Federal
Circuit in Norman found this behavior, in addition to certain actions “which had the effect
of inhibiting disclosure of the account to the IRS,” such as opening the “foreign account
as a ‘numbered account,’” “preventing UBS [a foreign bank] from investing in U.S.
securities on her behalf,” and receiving money withdrawn in cash, evidence of willfulness.
Id. (alteration added). The Federal Circuit in Norman also considered evidence of
willfulness to be the taxpayer’s “false statements to the IRS about her knowledge of, and
the circumstances surrounding, the account.” Id.

       More recent cases issued by judges of the United States Court of Federal Claims
also have considered failure to disclose the existence of a foreign account to one’s
accountant as grounds for a determination of willfulness. The judge in Landa v. United
States found willfulness when the taxpayer “failed to disclose this foreign account to his
accountant and never asked his accountant how to report the income from the foreign
account,” which led to filing a tax return that did not reflect the foreign account. Landa v.
United States, 153 Fed. Cl. at 597. The judge in Kimble v. United States found the
taxpayer showed “reckless disregard,” and therefore, “‘willful[ness],’” when the taxpayer
“did not review her individual income tax returns for accuracy” and “falsely represent[ed]
under penalty of perjury, that she had no foreign bank accounts.” Kimble v. United States,
141 Fed. Cl. at 386 (alteration added).

         While plaintiffs maintain that Mrs. Jones did not have knowledge about the
reporting requirements on foreign income or the attendant tax liabilities, pursuant to the
applicable law of the Federal Circuit, Mrs. Jones’ ignorance of her foreign account
reporting requirements does not counteract her responsibilities or liabilities under the
Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., and implementing regulations, see, e.g.,
31 C.F.R. §§ 1010.306, 1010.350. See Norman v. United States, 942 F.3d at 1115.
According to plaintiffs’ complaint and attached documents, including the Proposed
Statement of Uncontroverted Facts from Mrs. Jones’ earlier suit challenging Mr. Jones’
willful FBAR penalty, Jones v. United States, Case No. 19-00173, which was attached to
plaintiffs’ complaint in the above captioned case, there is no dispute that in the time period
covered by the IRS’s willfulness determination, the tax years 2011 and 2012, Mrs. Jones
possessed foreign financial accounts. Specifically, as enumerated in the Proposed
Statement of Uncontroverted Facts, Mrs. Jones owned two Canadian accounts and one
New Zealand account in her name alone, and one Canadian account and three New
Zealand accounts jointly with her husband. Further, plaintiffs’ complaint states that Mrs.
Jones, in her amended tax returns, “acknowledg[ed] the ownership of foreign accounts.”

                                             50
         In addition to the complaint and documents attached thereto, on a motion to
dismiss for failure to state a claim the court also considers documents which are
referenced in the complaint, see Bell/Heery v. United States, 106 Fed. Cl. 300, 301-07
(2012), aff’d, 739 F.3d 1324 (Fed. Cir. 2014), or which are “integral to” plaintiffs’ claim.
See Dimare Fresh, Inc. v. United States, 808 F.3d 1301, 1306 (Fed. Cir. 2014).
Specifically, the court considers the representations made by Mrs. Jones as set forth in
the Attachments A and B to the Form 14654 which, while not attached to the complaint,
are “expressly linked to” plaintiffs’ claims, because Attachments A and B were filed with
the Form 14654 in Mrs. Jones’ submission to the Streamlined Procedures, and Form
14654 is frequently referenced by both plaintiffs and defendant in the current proceedings.
Moreover, plaintiffs have not contested the validity of the facts contained in Attachments
A and B. See Bell/Heery v. United States, 106 Fed. Cl. at 308. In her Attachment A to the
Form 14654, Mrs. Jones detailed the account balances of her foreign accounts between
2008 and 2013. In her Attachment B to the Form 14654, Mrs. Jones specifically stated
that “[p]rior to his death, my husband added me as a joint owner of some of his New
Zealand accounts,” and that “I separately established savings accounts in Canada many
decades ago, when I was living in Canada.” These facts support a finding that not only
did Mrs. Jones own, by herself or jointly with her husband, foreign bank accounts, Mrs.
Jones also knew of the accounts before her entry into the Streamlined Procedures. The
Attachment B also states that “[m]y husband and I had been jointly filing U.S. federal
income tax returns for the last several years, but we never reported the interest income
generated by the Bank Accounts on those returns,” and that “[n]either my husband nor I
filed Treasury Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts
reporting our interests in the Bank Accounts” before 2013. The Attachment B to the Form
14654 further states that the Joneses’ accountant, Mr. Burke, “never asked the two of us
if we had assets in either of our native countries of New Zealand or Canada,” nor “if we
had foreign accounts that would need to be reported,” and “[n]one of the U.S. tax return
preparers of my husband and I ever advised us of the requirements” of FBAR reporting.
These facts support the conclusion that, not only did Mrs. Jones own foreign accounts,
she failed to disclose those accounts to her tax return preparer and failed to disclose
those accounts to the IRS when she filed the tax returns. From these facts, the court
concludes that Mrs. Jones represented to the IRS on her tax returns “that she had no
interest in any foreign bank account” prior to filing her amended returns following the
death of Mr. Jones. Norman v. United States, 942 F.3d at 1116. By failing to disclose to
the IRS the existence of the foreign accounts in her prior tax returns, of which the record
before the court indicates Mrs. Jones was aware, Mrs. Jones “falsely represent[ed] under
penalty of perjury, that she had no foreign bank accounts.” Kimble v. United States, 141
Fed. Cl. at 386. The law of this Circuit, which, as demonstrated above, understands
“willfulness” in the context of FBAR penalties to include “recklessness,” classifies Mrs.
Jones’ failure to inform her accountant of her foreign accounts, and her failure to include
those foreign accounts on her prior tax returns, as “willful” violations of the Bank Secrecy
Act and the regulations promulgated pursuant thereto. See id. Accordingly, the court finds
the IRS’s determination of willfulness with respect to Mrs. Jones, and the accompanying
assessment of willful FBAR penalties against Mrs. Jones, to be supported at this time by
the available evidence. Therefore, given the facts presented to the court, plaintiffs would

                                            51
not appear to have grounds to allege a breach of contract, even if a contract had come
into existence, which the court has held did not.

       Count II – The Exaction Claim25

         As indicated above, defendant also argues that this court lacks subject matter
jurisdiction over plaintiffs’ Count Two for illegal exaction, “because plaintiffs have failed
to file a claim for refund of the Miscellaneous Offshore Penalty with the IRS.” Defendant
argues that

       [t]his Court lacks jurisdiction over plaintiffs’ illegal exaction claims because,
       as discussed herein, this case is fundamentally a tax refund suit that can
       only be brought under I.R.C. [Internal Revenue Code, 26 U.S.C.] § 7422,
       and plaintiffs have failed to comply with the jurisdictional prerequisites to file
       a tax refund suit.

(citing United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 12 (2008)) (alteration
added).26

25  The court notes that the illegal exaction claim in plaintiffs’ complaint is different from
the illegal exaction claims brought in the California Federal District Court cases. The
cases in the California Federal District Court concerned illegal exaction claims that
challenged the IRS’s willfulness determinations of Mr. Jones and Mrs. Jones and sought
the return of the partial payments made against the willful FBAR penalties. The illegal
exaction claim in plaintiffs’ Count Two in the above captioned case is concerned only with
the statutory basis (or lack thereof) for the Miscellaneous Offshore Penalty Mrs. Jones
paid. Therefore, the illegal exaction claim in Count Two concerns a different penalty,
seeks a different recovery, and asserts a different theory from what was previously
litigated in the California District Court cases.

26  Defendant, in its supplemental brief, also argues for the first time that, “if the Court
determines that it has subject matter jurisdiction over plaintiffs’ illegal exaction claim or
that Form 14654 constituted a contract between Mrs. Jones and the United States,” then
“the doctrines of waiver and accord and satisfaction may apply” to bar Mrs. Jones’ suit
in the above captioned case to recover the Miscellaneous Offshore Penalty. According
to defendant, “[t]he settlement documents” from Mrs. Jones’ prior settlement agreement
with the government, which resolved the willful FBAR penalties owed by Mr. and Mrs.
Jones and concluded the California Federal District Court cases, “indicate that the
parties [to the prior suits] intended that Mrs. Jones would waive any right to recover the
MOP in a separate suit—that is, she [Mrs. Jones] waived the right to prosecute the
present suit” in the above captioned case. (alterations added). Defendant indicates,
however, that further discovery and “a more developed factual record,” including
“[t]estimony of the individuals involved in the settlement of the California cases” “would
be helpful in resolving these defenses.” Plaintiffs’ response to defendant’s arguments for
the applicability of the doctrines of waiver and accord and satisfaction is to assert that
“Mrs. Jones never settled, waived or conceded the $156,795.26 streamlined payment

                                              52
        “Subject-matter jurisdiction may be challenged at any time by the parties or by the
court sua sponte.” Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir. 2004) (quoting
Fanning, Phillips & Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998)), reh’g and reh’g
en banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1127 (2005); see also St. Bernard
Parish Gov’t v. United States, 916 F.3d 987, 992-93 (Fed. Cir. 2019) (“[T]he court must
address jurisdictional issues, even sua sponte, whenever those issues come to the court’s
attention, whether raised by a party or not, and even if the parties affirmatively urge the
court to exercise jurisdiction over the case.” (citing Foster v. Chatman, 136 S. Ct. 1737,
1745 (2016)); Int’l Elec. Tech. Corp. v. Hughes Aircraft Co., 476 F.3d 1329, 1330 (Fed.
Cir. 2007); Haddad v. United States, 152 Fed. Cl. 1, 16 (2021); Fanelli v. United States,
146 Fed. Cl. 462, 466 (2020). The Tucker Act, 28 U.S.C. § 1491 (2018), grants jurisdiction
to this court as follows:

       The United States Court of Federal Claims shall have jurisdiction to render
       judgment upon any claim against the United States founded either upon the
       Constitution, or any Act of Congress or any regulation of an executive
       department, or upon any express or implied contract with the United States,
       or for liquidated or unliquidated damages in cases not sounding in tort.

28 U.S.C. § 1491(a)(1). As interpreted by the United States Supreme Court, the Tucker
Act waives sovereign immunity to allow jurisdiction over claims against the United States
(1) founded on an express or implied contract with the United States, (2) seeking a refund
from a prior payment made to the government, or (3) based on federal constitutional,
statutory, or regulatory law mandating compensation by the federal government for
damages sustained. See United States v. Navajo Nation, 556 U.S. 287, 289-90 (2009);
see also Me. Community Health Options v. United States, 140 S. Ct. 1308, 1327-28
(2020); United States v. Mitchell, 463 U.S. 206, 216 (1983); Sanford Health Plan v. United
States, 969 F.3d 1370, 1378 (Fed. Cir. 2020); Alvarado Hosp., LLC v. Price, 868 F.3d
983, 991 (Fed. Cir. 2017); Greenlee Cnty., Ariz. v. United States, 487 F.3d 871, 875 (Fed.
Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2007), cert. denied, 552 U.S. 1142 (2008);
Palmer v. United States, 168 F.3d 1310, 1314 (Fed. Cir. 1999); Gulley v. United States,
150 Fed. Cl. 405, 411 (2020); Kuntz v. United States, 141 Fed. Cl. 713, 717 (2019). In
Ontario Power Generation, Inc. v. United States, the United States Court of Appeals for
the Federal Circuit identified three types of monetary claims for which jurisdiction is
lodged in the United States Court of Federal Claims. The Ontario Power Generation, Inc.
court wrote:

       The underlying monetary claims are of three types. . . . First, claims alleging
       the existence of a contract between the plaintiff and the government fall
       within the Tucker Act’s waiver . . . . Second, the Tucker Act’s waiver
       encompasses claims where “the plaintiff has paid money over to the

previously made which is the economic issue at stake in this case,” and to reiterate, later
in plaintiffs’ supplemental brief, that “[a]t no time however, did Mrs. Jones or her counsel
waive her right to seek a refund for the illegal exaction of the $156,795 here at issue.”

                                             53
       Government, directly or in effect, and seeks return of all or part of that sum.”
       Eastport S.S. [Corp. v. United States, 178 Ct. Cl. 599, 605-06,] 372 F.2d
       [1002,] 1007-08 [(1967)] (describing illegal exaction claims as claims “in
       which ‘the Government has the citizen’s money in its pocket’” (quoting
       Clapp v. United States, 127 Ct. Cl. 505, 117 F. Supp. 576, 580 (1954)) . . . .
       Third, the Court of Federal Claims has jurisdiction over those claims where
       “money has not been paid but the plaintiff asserts that he is nevertheless
       entitled to a payment from the treasury.” Eastport S.S., 372 F.2d at 1007.
       Claims in this third category, where no payment has been made to the
       government, either directly or in effect, require that the “particular provision
       of law relied upon grants the claimant, expressly or by implication, a right to
       be paid a certain sum.” Id.; see also [United States v. ]Testan, 424 U.S.
       [392,] 401-02 [(1976)] (“Where the United States is the defendant and the
       plaintiff is not suing for money improperly exacted or retained, the basis of
       the federal claim-whether it be the Constitution, a statute, or a regulation-
       does not create a cause of action for money damages unless, as the Court
       of Claims has stated, that basis ‘in itself . . . can fairly be interpreted as
       mandating compensation by the Federal Government for the damage
       sustained.’” (quoting Eastport S.S., 372 F.2d at 1009)). This category is
       commonly referred to as claims brought under a “money-mandating”
       statute.

Ont. Power Generation, Inc. v. United States, 369 F.3d 1298, 1301 (Fed. Cir. 2004); see
also Samish Indian Nation v. United States, 419 F.3d at 1364; Twp. of Saddle Brook v.
United States, 104 Fed. Cl. 101, 106 (2012).

        As the Federal Circuit has explained, “[a]llegations of subject matter jurisdiction, to
suffice, must satisfy a relatively low standard—must exceed a threshold that ‘has been
equated with such concepts as “essentially frivolous,” “wholly insubstantial,” “obviously
frivolous,” and “obviously without merit.”’” Boeing Co. v. United States, 968 F.3d 1371,
1383 (Fed. Cir. 2020) (quoting Shapiro v. McManus, 136 S. Ct. 450, 456 (2015)).
Accordingly, “to establish Tucker Act jurisdiction for an illegal exaction claim, a party that
has paid money over to the government and seeks its return must make a non-frivolous
allegation that the government, in obtaining the money, has violated the Constitution, a
statute, or a regulation.” Id.; see also Gulley v. United States, 150 Fed. Cl. at 418; Ohio
v. United States, 150 Fed. Cl. 173, 180 (2020); Perry v. United States, 149 Fed. Cl. 1, 13
(2020), aff’d 2021 WL 2935075 (Fed. Cir. 2021).

        “Determination of jurisdiction starts with the complaint, which must be well-pleaded
in that it must state the necessary elements of the plaintiff’s claim, independent of any
defense that may be interposed.” Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir.)
(citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983)),
reh’g denied (Fed. Cir. 1997); see also Klamath Tribe Claims Comm. v. United States, 97
Fed. Cl. 203, 208 (2011); Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed.
Cl. 710, 713 (2010). A plaintiff need only state in the complaint “a short and plain
statement of the grounds for the court’s jurisdiction,” and “a short and plain statement of

                                              54
the claim showing that the pleader is entitled to relief.” RCFC 8(a)(1), (2); Fed. R. Civ. P.
8(a)(1), (2) (2022); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555-57, 570 (2007)). To properly state a claim for relief,
“[c]onclusory allegations of law and unwarranted inferences of fact do not suffice to
support a claim.” Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998); see also
McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1363 n.9 (Fed. Cir. 2007) (Dyk, J.,
concurring in part, dissenting in part) (quoting C. WRIGHT AND A. M ILLER, FEDERAL
PRACTICE AND PROCEDURE § 1286 (3d ed. 2004)); “A plaintiff’s factual allegations must
‘raise a right to relief above the speculative level’ and cross ‘the line from conceivable to
plausible.’” Three S Consulting v. United States, 104 Fed. Cl. 510, 523 (2012) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. at 555), aff’d, 562 F. App’x 964 (Fed. Cir.), reh’g
denied (Fed. Cir. 2014); see also Hale v. United States, 143 Fed. Cl. 180, 190 (2019). As
stated in Ashcroft v. Iqbal, “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’ 550 U.S. at 555. Nor does a
complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’”
Ashcroft v. Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. at 555).

        In Count Two of plaintiffs’ complaint, plaintiffs assert an illegal exaction claim in
which they argue that, because the Miscellaneous Offshore Penalty is not authorized by
any statute, the IRS had no authority to collect the Miscellaneous Offshore Penalty and
Mrs. Jones’ Miscellaneous Offshore Penalty payment must be returned to the executors
of her estate. Throughout plaintiffs’ complaint, plaintiffs describe the Miscellaneous
Offshore Penalty as “hav[ing] no statutory authority,” as “not exist[ing] in the law,” as “in
contravention of statutes of the United States,” as “without any authority in the law or any
statute,” and as being “nowhere to be found in any statute, not in Title 26 or Title 31.”
These descriptions indicate that plaintiffs argue that the Miscellaneous Offshore Penalty
paid by Mrs. Jones was “collected without authority” or was “in any manner wrongfully
collected,” per I.R.C. § 7422(a) (2018). The United States Court of Appeals for the Federal
Circuit in Norman v. United States has indicated that

       [a]n “illegal exaction,” as that term is generally used, involves money that
       was “improperly paid, exacted, or taken from the claimant in contravention
       of the Constitution, a statute, or a regulation.” Eastport S.S. Corp. v. United
       States, 178 Ct. Cl. 599, 372 F.2d 1002, 1007 (1967). The classic illegal
       exaction claim is a tax refund suit alleging that taxes have been improperly
       collected or withheld by the government. See, e.g., City of Alexandria v.
       United States, 737 F.2d 1022, 1028 (Fed. Cir. 1984). An illegal exaction
       involves a deprivation of property without due process of law, in violation of
       the Due Process Clause of the Fifth Amendment to the Constitution. See,
       e.g., Casa de Cambio Comdiv [S.A. de C.V. v. United States], 291 F.3d
       [1356,] 1363 [(Fed. Cir. 2002)]. The Court of Federal Claims ordinarily lacks
       jurisdiction over due process claims under the Tucker Act, 28 U.S.C. §
       1491, see Murray v. United States, 817 F.2d 1580, 1582 (Fed. Cir. 1987),
       but has been held to have jurisdiction over illegal exaction claims “when the
       exaction is based upon an asserted statutory power.” Aerolineas Argentinas
       v. United States, 77 F.3d 1564, 1573 (Fed. Cir. 1996); see also Eastport
       [S.S. Corp. v. United States], 372 F.2d at 1008 (Court of Claims had

                                              55
       jurisdiction over exaction “based upon a power supposedly conferred by a
       statute”). To invoke Tucker Act jurisdiction over an illegal exaction claim, a
       claimant must demonstrate that the statute or provision causing the
       exaction itself provides, either expressly or by “necessary implication,” that
       “the remedy for its violation entails a return of money unlawfully exacted.”
       Cyprus Amax Coal Co. v. United States, 205 F.3d 1369, 1373 (Fed. Cir.
       2000) (concluding that the Tucker Act provided jurisdiction over an illegal
       exaction claim based upon the Export Clause of the Constitution because
       the language of that clause “leads to the ineluctable conclusion that the
       clause provides a cause of action with a monetary remedy”).

Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005) cert. denied, 547 U.S.
1147 (2006); see also Columbus Reg’l Hosp. v. United States, 990 F.3d at 1348 (“An
illegal exaction occurs when the plaintiff has paid money to the government and seeks
return of the money that was ‘improperly . . . taken from the claimant in contravention of
the Constitution, a statute, or a regulation.’” (quoting Virgin Islands Port Auth. v. United
States, 922 F.3d 1328, 1333 (Fed. Cir. 2019))); Christy, Inc. v. United States, 971 F.3d
1332, 1336 (Fed. Cir. 2020), cert. denied, 141 S. Ct. 1393 (2021); Nat’l Veterans Legal
Servs. Program v. United States, 968 F.3d 1340, 1348 (Fed. Cir. 2020). “The essence of
an illegal exaction is when ‘the government has the citizen’s money in its pocket.’”
Columbus Reg’l Hosp. v. United States, 990 F.3d at 1348 (quoting Nat’l Veterans Legal
Servs. Program v. United States, 968 F.3d at 1348). The Federal Circuit has explained
that “a plaintiff has a claim for an illegal exaction only where the government has direct
and substantial impact on the plaintiff asserting the claim.” Casa de Cambio Comdiv S.A.,
de C.V. v. United States, 291 F.3d 1356, 1364 (Fed. Cir. 2002), cert. denied, 538 U.S.
921 (2003); see also Ont. Power Generation, Inc. v. United States, 369 F.3d at 1303
(“[T]he government is considered to have illegally exacted money from a plaintiff only
where ‘the government’s actions on the intermediate third party have a “direct and
substantial” impact on the plaintiff asserting the [illegal exaction] claim.’” (quoting Casa
de Cambio Comdiv S.A., de C.V. v. United States, 291 F.3d at 1361) (alteration in
original)). Another judge of the United States Court of Federal Claims has explained that
“[a]n illegal exaction may be brought where ‘(1) money was taken [from the plaintiff] by
the government and (2) the exaction violated a provision of the Constitution, a statute, or
a regulation.’” M Nicolas Enters., LLC v. United States, 155 Fed. Cl. 608, 619 (2021)
(alterations in original except “[a]n”) (quoting Piszel v. United States, 121 Fed. Cl. 793,
801 (2015), aff’d 833 F.3d 1366 (Fed. Cir. 2016), cert. denied, 138 S. Ct. 85 (2017)); see
also Pate v. United States, 152 Fed. Cl. 553, 557 (2021) (explaining that “[t]o prove that
the VA’s collections were an illegal exaction,” plaintiff “must show that the money ‘was
improperly paid, exacted, or taken from the claimant in contravention of the Constitution,
a statute, or a regulation.’” (quoting Aerolineas Argentinas v. United States, 77 F.3d 1564,
1572-73 (Fed. Cir. 1996) (internal quotations omitted), reh’g denied and en banc
suggestion declined (1996))). “For actions pursuant to contracts with the United States,
actions to recover illegal exactions of money by the United States, and actions brought
pursuant to money-mandating statutes, regulations, executive orders, or constitutional
provisions, the Tucker Act waives the sovereign immunity of the United States.” Roth v.
United States, 378 F.3d 1371, 1384 (Fed. Cir. 2004); see also Ont. Power Generation,
Inc. v. United States, 369 F.3d at 1301.

                                            56
       Regarding jurisdiction in illegal exaction claims,

       in contrast to other actions for money damages, jurisdiction exists under the
       Tucker Act “even when the Constitutional provision allegedly violated does
       not contain compensation mandating language.” Casa de Cambio Comdiv
       S.A. de C.V. v. United States, 48 Fed. Cl. 137, 143-48 (2000) (citing
       Bowman v. United States, 35 Fed. Cl. 397, 401 (1996), and holding “that
       this court has jurisdiction to consider whether the alleged violation of the
       regulations led to an illegal exaction violative of the Due Process Clause,
       despite the fact that clause does not contain compensation mandating
       language”), aff’d, 291 F.3d 1356, 1363 (Fed. Cir. 2002) (“Our cases have
       established that there is no jurisdiction under the Tucker Act over a Due
       Process claim unless it constitutes an illegal exaction.” (emphasis added)
       (citing Murray v. United States, 817 F.2d 1580, 1583 (Fed. Cir. 1987), cert.
       denied, 489 U.S. 1055, 109 S. Ct. 1318, 103 L. Ed. 2d 587 (1989), and
       Inupiat Comy. of the Arctic Slope v. United States, 230 Ct. Cl. 646, 662, 680
       F.2d 122, cert. denied 459 U.S. 969, 103 S. Ct. 299, 74 L. Ed. 2d 281
       (1982).

Perry v. United States, 149 Fed. Cl. at 25; see also Boeing Co. v. United States, 968 F.3d
at 1384; Casa de Cambio Comdiv S.A., de C.V. v. United States, 291 F.3d at 1363;
Aerolineas Argentinas v. United States, 77 F.3d at 1572 (“Tucker Act claims may be made
for recovery of monies that the government has required to be paid contrary to law.”);
Thomas v. United States, 155 Fed. Cl. 772, 776 (2021) (“Unlike other types of claims in
this Court, with an illegal exaction claim, ‘[j]urisdiction exists even when the provisions
allegedly violated do not contain money-mandating language.’” (alteration in original)
(quoting Bernaugh v. United States, 38 Fed. Cl. 538, 543 (1997), aff’d 168 F.3d 1319
(Fed. Cir. 1998))); Mendu v. United States, 153 Fed. Cl. 357, 364 (2021) (“‘The refund of
a penalty improperly exacted pursuant to an Act of Congress is a substantive right for
money damages’ and constitutes an illegal exaction claim under the Tucker Act.” (quoting
Trayco, Inc. v. United States, 994 F.2d 832, 837 (Fed. Cir. 1993))); Acadiana Mgmt. Grp.,
LLC v. United States, 151 Fed. Cl. 121, 129-30 (2020), recons. denied, (2021), appeal
filed, No. 21-1941; Ohio v. United States, 150 Fed. Cl. 173, 180-81 (2020); Gulley v.
United States, 150 Fed. Cl. at 415 (explaining that “for a statutory or constitutional
provision to serve as the basis for a claim within this Court’s jurisdiction, the provision
must either be money-mandating or support a claim for an illegal exaction”); Allegheny
Techs. Inc. v. United States, 144 Fed. Cl. 126, 136 (2019) (“An exaction claim provides
an independent basis for jurisdiction and is a type of claim that the Tucker Act and the
Little Tucker Act were designed to address.”); Virgin Islands Port Auth. v. United States,
136 Fed. Cl. 7, 14 (2017) (“Plaintiff need not point to a money-mandating provision,
because the necessary remedy to the government improperly using its authority to place
‘a citizen’s money in its pocket’ is a return of that sum.”) aff’d 922 F.3d 1328 (Fed. Cir.
2019).

      Defendant argues that “this Court lacks subject matter jurisdiction over plaintiffs’”
Count Two claim for illegal exaction, “because plaintiffs have failed to file a claim for
refund with the IRS” before bringing suit in this court, which is required in a tax refund

                                             57
suit. According to defendant, “[t]he MOP is a Title 26 penalty paid in lieu of other penalties
under the internal revenue laws.” Further, according to defendant,

       [w]hereas the IRS could have assessed taxes for earlier years, civil tax
       penalties, failure-to-pay penalties, and a litany of information return
       penalties, as a matter of administrative expedience, the IRS imposed the
       one-time MOP. In effect, the MOP is simply a substitute for other Title 26
       penalties and tax loss for years prior to the disclosure period.

Defendant argues that “[b]ecause the MOP covers taxes and other penalties that are
considered taxes, in similar fashion the MOP is considered a tax under the internal
revenue laws.” Defendant argues, however, that “[t]he Court need not resolve the issue
of whether the MOP is a Title 26 penalty because [I.R.C.] § 7422(a) first requires a claim
for refund to be filed with the IRS before plaintiffs can litigate the merits of their argument,”
which plaintiffs and Mr. and Mrs. Jones had failed to do. In their response, plaintiffs argue
that “the MOP described in Form 14654, and that was paid by Mrs. Jones, is not reflected
in title 26.” (capitalization in original). Therefore, according to plaintiffs, “a claim for tax
refund was not required to be filed prior to this procedure.”

       The statute at I.R.C. § 7422(a) provides:

       No suit or proceeding shall be maintained in any court for the recovery of
       any internal revenue tax alleged to have been erroneously or illegally
       assessed or collected, or of any penalty claimed to have been collected
       without authority, or of any sum alleged to have been excessive or in any
       manner wrongfully collected, until a claim for refund or credit has been duly
       filed with the Secretary, according to the provisions of law in that regard,
       and the regulations of the Secretary established in pursuance thereof.

I.R.C. § 7422(a) (2018). The Federal Circuit has explained that “the Supreme Court has
interpreted the filing requirement in § 7422(a) as a jurisdictional limitation,” in particular
the requirement of “the fact of filing.” Brown v. United States, 22 F.4th 1008, 1011 (Fed.
Cir. 2022) (citing United States v. Dalm, 494 U.S. 596, 609-10 (1990)); see also Stephens
v. United States, 884 F.3d 1151, 1156 (Fed. Cir. 2018) (holding that plaintiffs’ refund suit
was barred for failing to file a refund claim with the IRS); (RadioShack Corp. v. United
States, 566 F.3d 1358, 1360 (Fed. Cir. 2009). A judge of the Court of Federal Claims has
similarly explained, “section 7422(a) creates a jurisdictional prerequisite to filing a refund
suit.” Gluck v. United States, 84 Fed. Cl. 609, 613 (2008) (citing Chicago Milwaukee Corp.
v. United States, 40 F.3d 373, 374 (Fed. Cir. 1994), reh’g and reh’g en banc denied, 141
F.3d 1112 (Fed. Cir.), cert. denied, 525 U.S. 932 (1998) (citing Burlington N., Inc. v. United
States, 231 Ct. Cl. 222, 684 F.2d 866, 868 (1983))). Therefore, according to defendant, if
the Miscellaneous Offshore Penalty paid by Mrs. Jones is a tax, a penalty, or a “sum
alleged to have been excessive or in any manner wrongfully collected,” then any suit to
recover the Miscellaneous Offshore Penalty, styled as a claim for illegal exaction or
otherwise, must meet the jurisdictional prerequisite of I.R.C. § 7422(a) requiring that “a
claim for refund or credit has been duly filed with the Secretary” before filing with this
court. I.R.C. § 7422(a).

                                               58
       The United States Supreme Court in Flora v. United States, 362 U.S. 145 (1960),
considered the application of 28 U.S.C. § 1346(a)(1) (1954), a statute with nearly identical
language to I.R.C. § 7422(a). The statute at 28 U.S.C. § 1346(a)(1), as enacted at the
time of Flora, provided concurrent jurisdiction over

       [a]ny civil action against the United States for the recovery of any internal -
       revenue tax alleged to have been erroneously or illegally assessed or
       collected, or any penalty claimed to have been collected without authority
       or any sum alleged to have been excessive or in any manner wrongfully
       collected under the internal-revenue laws

28 U.S.C. § 1346(a)(1) (1954), to the Court of Claims and to the United States District
Courts. See Flora v. United States, 362 U.S. at 148-49. The Supreme Court described
the “any sum” language as “a catchall” which should be interpreted according to a
“disjunctive reading” in relation to the “internal-revenue tax” and “penalty” language. Id.
at 149. The Supreme Court in Flora held that

       ‘any sum,’ instead of being related to ‘any internal-revenue tax’ and ‘any
       penalty,’ may refer to amounts which are neither taxes nor penalties. Under
       this interpretation, the function of the phrase is to permit suit for recovery of
       items which might not be designated as either ‘taxes' or ‘penalties' by
       Congress or the courts.

Id. In a footnote, the Supreme Court in Flora further explained that the inclusion of the
“any sum” language in 28 U.S.C. § 1346(a)(1) “indicates no more than an intent to cover
taxes, penalties, and sums which might, strictly speaking, be neither taxes nor penalties.”
Flora v. United States, 362 U.S. at 155 n.16.27

      In United States v. Clintwood Elkhorn Mining Co., the Supreme Court elaborated
on the relationship of the Internal Revenue Code to this court’s jurisdiction under the
Tucker Act:

       The Internal Revenue Code provides that taxpayers seeking a refund of
       taxes unlawfully assessed must comply with tax refund procedures set forth
       in the Code. Under those procedures, a taxpayer must file an administrative
       claim with the Internal Revenue Service before filing suit against the

27 Defendant cites to Flora’s discussion of the “any sum” language for support that the
Miscellaneous Offshore Penalty “falls within the broad language of the statute,” I.R.C. §
7422(a). Plaintiffs object to this reference to Flora on the grounds that Flora “stands for
the proposition that a full payment of taxes and tax penalties must be paid prior to bringing
a suit for a refund,” and state that “[t]he government cannot argue she [Mrs. Jones] owes
additional amounts and must somehow pay those before availing herself of the claims in
this court.” (alteration added). There is no dispute in the current case that Mrs. Jones paid
her Miscellaneous Offshore Penalty in full. Moreover, at the conclusion of the California
District Court cases, the cases were settled and payment to resolve her outstanding
FBAR liability was made.

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       Government. . . . The question in this case is whether a taxpayer suing for
       a refund of taxes collected in violation of the Export Clause of the
       Constitution may proceed under the Tucker Act, when his suit does not
       meet the time limits for refund actions in the Internal Revenue Code. The
       answer is no.

United States v. Clintwood Elkhorn Min. Co., 553 U.S. at 4. The Supreme Court in
Clintwood Elkhorn further explained:

       A taxpayer seeking a refund of taxes erroneously or unlawfully assessed or
       collected may bring an action against the Government either in United
       States district court or in the United States Court of Federal Claims. 28
       U.S.C. § 1346(a)(1); EC Term of Years Trust v. United States, 550 U.S.
       429, 432, and n. 2, 127 S. Ct. 1763, 1766 n. 2, 167 L. Ed. 2d 729 (2007).
       The Internal Revenue Code specifies that before doing so, the taxpayer
       must comply with the tax refund scheme established in the Code. United
       States v. Dalm, 494 U.S. 596, 609-10, 110 S. Ct. 1361, 108 L. Ed 2d 548
       (1990). That scheme provides that a claim for a refund must be filed with
       the Internal Revenue Service (IRS) before suit can be brought, and
       establishes strict timeframes for filing such a claim.

United States v. Clintwood Elkhorn Min. Co., 553 U.S. at 4. The Supreme Court continued
and elaborated further on the meaning of I.R.C. § 7422(a):

       Title 26 U.S.C. § 7422(a) states that “[n]o suit . . . shall be maintained in any
       court for the recovery of any internal revenue tax alleged to have been
       erroneously or illegally assessed or collected, or of any penalty claimed to
       have been collected without authority, or of any sum alleged to have been
       excessive or in any manner wrongfully collected, until a claim for refund
       . . . has been duly filed with” the IRS. (Emphasis added.) Here the
       companies did not file a refund claim with the IRS for the 1994-1996 taxes,
       and therefore may bring “[n]o suit in “any court” to recover “any internal
       revenue tax” or “any sum” alleged to have been wrongfully collected “in any
       manner.” Five “any’s” in one sentence and it begins to seem that Congress
       meant the statute to have expansive reach.

United States v. Clintwood Elkhorn Min. Co., 553 U.S. at 7 (emphasis and alterations in
original). While the Clintwood Elkhorn Court’s analysis was focused on a relatively narrow
question of whether the six-year statute of limitations under the Tucker Act applied to a
tax refund suit that otherwise would have been subject to a shorter, two- to three-year
time bar under I.R.C. § 6511(a), United States v. Clintwood Elkhorn Mining Co., 553 U.S.
at 4-5, the principles underlying the Supreme Court’s holding are instructive. The
Supreme Court in Clintwood Elkhorn reasoned, “[t]he refund scheme in the current Code
would have ‘no meaning whatever’ if taxpayers failing to comply with it were nonetheless
allowed to bring suit subject only to the Tucker Act’s longer time bar,” and that “Congress
has the authority to require administrative exhaustion before allowing a suit against the
Government, even for a constitutional violation.” Id. at 9. Further, “it is certainly within

                                              60
Congress’s authority to ensure that allegations of taxes unlawfully assessed—whether
the asserted illegality is based upon the Export Clause or any other provision of law—are
processed in an orderly and timely manner, and that costly litigation is avoided when
possible.” Id. at 12. Given that I.R.C. § 7422(a), by its terms, subjects not only actions “for
the recovery of any internal revenue tax” or for the recovery “of any penalty” to its
jurisdictional prerequisite, but also actions for the recovery “of any sum,” any challenge
to the previously collected sums by the IRS, whether styled as a claim for refund or for
illegal exaction, included in plaintiffs’ Count Two claim, would seem to be subject to the
restrictions in I.R.C. § 7422(a) as a jurisdictional prerequisite. See Alexander Proudfoot
Co. v. United States, 197 Ct. Cl. 219, 223 and n.2 (1972) (referring to I.R.C. § 7422(a)’s 28
“all-inclusive words” and stating that “[i]f the interest sought here is not included in ‘any
internal revenue tax alleged to have been erroneously or illegally assessed or collected,’
then it is covered by ‘any sum alleged to have been excessive or in any many wrongfully
collected’”).

        In order to try to argue that the Miscellaneous Offshore Penalty is neither a tax nor
a penalty under the Internal Revenue Code, plaintiffs cite to various subchapters and
sections of the Internal Revenue Code, although with little explanation. Plaintiffs’ unifying
theme appears to be that none of the sections which relate to taxes or penalties apply to
or cover the Miscellaneous Offshore Penalty. Plaintiffs quote from various sections of the
Internal Revenue Code, such as I.R.C. §§ 6511, 6671, and 6751, and seize upon
mentions of the words “tax” and “penalty,” along with conclusory statements such as
“[h]ere, we have no tax that was paid,” (emphasis in original), with otherwise sparse
reasoning, in an apparent attempt to illustrate that the Miscellaneous Offshore Penalty
paid by Mrs. Jones “is not a tax or penalty in the statute.” The statutory provisions cited
by plaintiffs are neither at issue in the case currently before the court, nor are they
dispositive of the issue that is before the court, whether the language of I.R.C. § 7422(a)
subjects plaintiffs’ claim to a jurisdictional requirement to bring a refund claim to the IRS
before filing suit in this court.

       While defendant does not contend that the Miscellaneous Offshore Penalty is
referenced in Title 26, defendant characterizes the Miscellaneous Offshore Penalty as “a
penalty assessed and collected under the internal revenue laws (Title 26 of the U.S.

28 The United States Court of Claims in Alexander Proudfoot Co. explained the application
of I.R.C. § 7422(a):

       Section 7422(a), 26 U.S.C. § 7422(a), forbids, in all-inclusive words, any
       suit “for the recovery of any internal revenue tax alleged to have been
       erroneously or illegally assessed or collected, or of any penalty claimed to
       have been collected without authority, or of any sum alleged to have been
       excessive or in any manner wrongfully collected,” until a proper refund or
       credit claim has been filed.

Alexander Proudfoot Co. v. United States, 197 Ct. Cl. at 223 (quoting I.R.C. § 7422(a)
(footnote omitted)).

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Code) in lieu of certain other penalties.” Defendant indicates in a footnote that I.R.C. §
7803(a)(2)(A)29 gives the IRS the authority to assess the Miscellaneous Offshore Penalty.
Defendant argues that

29   The statute at I.R.C. § 7803 provides, in relevant part:

         (a) Commissioner of Internal Revenue.--

                (1) Appointment.--

                       (A) In general.--There shall be in the Department of the
                       Treasury a Commissioner of Internal Revenue who shall be
                       appointed by the President, by and with the advice and
                       consent of the Senate. Such appointment shall be made from
                       individuals who, among other qualifications, have a
                       demonstrated ability in management.

                       (B) Term.--The term of the Commissioner of Internal Revenue
                       shall be a 5-year term, beginning with a term to commence on
                       November 13, 1997. Each subsequent term shall begin on the
                       day after the date on which the previous term expires.

                       (C) Vacancy.--Any individual appointed as Commissioner of
                       Internal Revenue during a term as defined in subparagraph
                       (B) shall be appointed for the remainder of that term.

                       (D) Removal.--The Commissioner may be removed at the will
                       of the President.

                       (E) Reappointment.--The Commissioner may be appointed
                       to serve more than one term.

                (2) Duties.--The Commissioner shall have such duties and powers
                as the Secretary may prescribe, including the power to—

                       (A) administer, manage, conduct, direct, and supervise the
                       execution and application of the internal revenue laws or
                       related statutes and tax conventions to which the United
                       States is a party; and

                       (B) recommend to the President a candidate for appointment
                       as Chief Counsel for the Internal Revenue Service when a
                       vacancy occurs, and recommend to the President the removal
                       of such Chief Counsel.

I.R.C. § 7803(a)(1)-(2) (emphasis in original).

                                               62
       [u]nder § 7803(a)(2)(A), the Commissioner of Internal Revenue has the
       authority “to administer, manage, conduct, direct, and supervise the
       execution and application of the internal revenue laws.” The authority to
       enforce a law includes the authority to refrain from taking enforcement
       action. Heckler v. Chaney, 470 U.S. 821, 831 (1985) (“[A]n agency’s
       decision not to prosecute or enforce, whether through civil or criminal
       process, is a decision generally committed to an agency’s absolute
       discretion.”).

(alteration in original). Defendant, however, does not elaborate on this argument further
in its motion to dismiss or in its reply brief. Defendant appears to be asserting that I.R.C.
§ 7803(a)(2)(A), as further explained by Heckler v. Chaney, 470 U.S. at 831 (explaining
that the “agency’s decision not to prosecute or enforce” is “committed to an agency’s
absolute discretion”), makes allowing participation in the Streamlined Procedures and the
collection of the Miscellaneous Offshore Penalty in place of the enforcement of “certain
other penalties” an option for the IRS to collect penalties, if appropriate, at the discretion
of the Commissioner. Plaintiffs do not address this argument of defendant’s except to
provide the following response:

       The government argues that this MOP is a Title 26 penalty because of the
       Commissioner’s authority under 26 U.S.C. §7803 to “administer, manage,
       conduct, direct and supervise the execution and applications [sic] of the
       internal revenue laws.” However, this is, in contrast, to a number of the
       various penalties specifically identified in Title 26. Such as 26 U.S.C.
       §§6672, 6674, 6677, 6679, 6682, 6684, 6685, 6686, 6688, 6689, 6690,
       6692, 6693, 6694, 6695, 6695A, 6702, 6704, 6705, 6707, 6707A, 6708,
       6713, and 6714.

       Defendant cites for support to two cases from the United States District Court for
the District of Columbia, Maze v. Internal Revenue Service, 206 F. Supp. 3d 1 (D.D.C.
2016), and to Harrison v. Internal Revenue Service, No. 20-828, 2021 WL 930266 (D.D.C.
Mar. 11, 2021). According to defendant,

       [a]s the District Court in Maze held, the MOP “is not a new penalty that the
       IRS invented.” Maze, 206 F. Supp. 3d at 14. Rather, “it is a label that the
       IRS developed to refer to standard payments required of taxpayers in lieu
       of other statutorily created penalties.” Id. Whereas the IRS could have
       assessed taxes for earlier years, civil tax fraud penalties, failure-to-pay
       penalties, and a litany of information return penalties, as a matter of
       administrative expedience, the IRS imposed the one-time MOP. In effect,
       the MOP is simply a substitute for other Title 26 penalties and tax loss for
       years prior to the disclosure period. Because those other penalties are
       considered taxes, in similar fashion the MOP is considered a tax under the
       internal revenue laws. Maze, 206 F. Supp. 3d at 14; see also Harrison v.
       IRS, No. 20-cv-828, 2021 WL 930266, *4 (D.D.C. Mar. 11, 2021).

                                             63
(footnote omitted). Moreover, defendant states that “the MOP is simply a consolidation of
all taxes and other potential penalties that could have been imposed under the internal
revenue laws.”

        While the Federal District Court for the District of Columbia in Maze and Harrison
did reach the conclusion that the Miscellaneous Offshore Penalty is a tax, the District
Court reached that conclusion in different contexts from the case currently before the
court. The court in Maze determined the Miscellaneous Offshore Penalty was a tax in the
context of finding that it was “deprived of subject matter jurisdiction over this case as a
result of the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act,”
reasons which are distinct from the issues in the case currently before the court. Maze v.
Internal Revenue Serv., 206 F. Supp. 3d at 21. The court in Harrison, similarly, reached
the conclusion that the Miscellaneous Offshore Penalty is a tax in the context of an
Administrative Procedure Act challenge. Harrison v. Internal Revenue Serv., 2021 WL
930266, at *4. Neither the Maze nor the Harrison courts identified the specific taxes and
penalties in lieu of which the Miscellaneous Offshore Penalty was assessed.

        In response to plaintiffs’ argument that the Miscellaneous Offshore Penalty is
neither a tax nor a penalty under the Internal Revenue Code, the court notes that although
the Miscellaneous Offshore Penalty may not carry an official title as a penalty, nor is there
enumeration in the United States Code, the payment of the Miscellaneous Offshore
Penalty by Mrs. Jones was as a payment for her failure to report and pay taxes for her
foreign accounts and as a way to rectify that failure, provided it was not found to be willful.
She entered the Streamlined Procedures, submitted the required information, and signed
the Form 14654, all voluntarily, as a way to minimize the totality of the possible tax
penalties the IRS could assess against her had she not entered into the Streamlined
Procedures. Further, as noted above, on the Form 14654, as part of her certification, Mrs.
Jones subscribed to the statement “I consent to the immediate assessment and collection
of a Title 26 miscellaneous offshore penalty for the most recent of the three tax years for
which I am providing amended income tax returns.”

         Moreover, the jurisdictional prerequisite of I.R.C. § 7422(a), by the statute’s text,
is not restricted in application only to taxes, penalties, and sums assessed under Title 26.
Rather, I.R.C. § 7422(a) states that “[n]o suit or proceeding shall be maintained in any
court for the recovery of any internal revenue tax . . . or of any penalty . . . or of any sum”
for which there has not been an administrative claim for refund filed with the IRS. I.R.C.
§ 7422(a); see also United States v. Clintwood Elkhorn Mining Co., 553 U.S. at 7; Flora
v. United States, 362 U.S. at 149; Alexander Proudfoot Co. v. United States, 197 Ct. Cl.
at 228-29; Gluck v. United States, 84 Fed. Cl. at 613-14. Even if the court were to grant
that the modifier “internal revenue” on the word “tax” indicated that section 7422(a)
applies only to taxes found in Title 26, as plaintiffs appear to argue, given their focus on
the argument that the Miscellaneous Offshore Penalty is not enumerated in Title 26, that
would not prevent the application of section 7422(a)’s jurisdictional prerequisite to
plaintiffs’ claim. By its text, section 7422(a) imposes its jurisdictional prerequisite not only
on claims for a “recovery of any internal revenue tax” but also on claims for a recovery “of
any penalty” and “of any sum” as well. I.R.C. § 7422(a). “[I]nternal revenue” does not
appear to modify “penalty” or “sum” in the statutory text. Id. Accordingly, even if “internal

                                              64
revenue tax” refers only to those taxes specifically enumerated in Title 26, thereby not
including the Miscellaneous Offshore Penalty paid by Mrs. Jones within the definition of
“internal revenue tax,” as plaintiffs argue, the question would remain as to whether the
Miscellaneous Offshore Penalty was a “penalty” or “sum” otherwise covered by section
7422(a). For these reasons, plaintiffs’ reliance that the Miscellaneous Offshore Penalty is
not enumerated in Title 26 does not convince the court that plaintiffs’ claim is not subject
to the jurisdictional prerequisite of I.R.C. § 7422(a).

       Plaintiffs have initiated the above captioned case by seeking “judgment in the
amount of $156,795.26 having been illegally exacted from Plaintiff [sic],” and plaintiffs
plead in Count Two that “the IRS must return the $156,795.26 paid by Mrs. Jones, now
deceased, which was an illegal exaction and was wrongfully collected under the guise of
the internal revenue laws.” As noted above, I.R.C. § 7422(a) applies a jurisdictional
prerequisite not only to claims “for the recovery of any internal revenue tax,” but also to
claims seeking to recover “any penalty claimed to have been collected without authority,”
and to claims seeking to recover “any sum alleged to have been excessive or in any
manner wrongfully collected . . . .” I.R.C. § 7422(a). Plaintiffs’ complaint refers to the
above captioned case as “for ‘penalty’ amounts,” along with repeated unqualified uses of
the word “penalty” to refer to the Miscellaneous Offshore Penalty amount paid, and the
Form 14654, which Mrs. Jones signed, which required Mrs. Jones to “consent to the
immediate assessment and collection of a Title 26 miscellaneous offshore penalty” to
enter into the Streamlined Procedures. These repeated uses of “penalty” language to
refer to the amount which plaintiffs seek to recover appear to constitute an
acknowledgment on the part of the executor plaintiffs, as well as by Mrs. Jones when she
signed the Form 14654, that the amount at issue is and was a “penalty.” Moreover, as
noted above, section 7422(a) employs “all-inclusive words,” Alexander Proudfoot Co. v.
United States, 197 Ct. Cl. at 223, when stating that the statute covers claims for “any
sum,” language which by its plain terms encompasses the amount plaintiffs seek to
recover. I.R.C. § 7422(a); see also Flora v. United States, 362 U.S. at 149.

        The court concludes that I.R.C. § 7422(a) applies to plaintiffs’ Count Two claim for
illegal exaction of the Miscellaneous Offshore Penalty, and in order to proceed with their
lawsuit plaintiffs first should have filed an administrative claim for a refund of the
Miscellaneous Offshore Penalty with the IRS before proceeding in this court. The parties
have not produced any documentation of such a claim previously initiated by plaintiffs or
Mrs. Jones for a refund of the Miscellaneous Offshore Penalty. Accordingly, pursuant to
I.R.C. § 7422(a) this court does not have jurisdiction to review plaintiffs’ illegal exaction
claim asserted by Count Two of plaintiffs’ complaint.

       Moreover, there is no dispute that Mrs. Jones volunteered to become part of the
Streamlined Procedures and consented to the collection of the Miscellaneous Offshore
Penalty. Plaintiffs’ complaint states that, following Mr. Jones’ death, Mrs. Jones “was
advised of the SDO,” plaintiffs’ abbreviation for the Streamlined Procedures, “and then
entered into it.” Plaintiffs’ complaint does not allege at any point that the IRS required Mrs.
Jones to pay the Miscellaneous Offshore Penalty. In fact, plaintiffs characterize Mrs.
Jones has having “accepted” the payment of the Miscellaneous Offshore Penalty in order
to enter the Streamlined Procedures. In addition, the language of the Form 14654

                                              65
indicates that payment of the Miscellaneous Offshore Penalty is entirely voluntary,
providing: “I consent to the immediate assessment and collection of a Title 26
miscellaneous offshore penalty for the most recent of the three tax years for which I am
providing amended income tax returns.” Mrs. Jones accepted and subscribed to this
language in the Form 14654, and plaintiffs do not now claim that Mrs. Jones’ payment of
the Miscellaneous Offshore Penalty was non-consensual. As explained above, claims for
illegal exaction require money to have been “improperly paid, exacted, or taken from”
plaintiffs. Pate v. United States, 152 Fed. Cl. at 557. In order to obtained Tucker Act
jurisdiction in this court, plaintiffs must assert a claim “for recovery of monies that the
government has required to be paid contrary to law.” Aerolineas Argentinas v. United
States, 77 F.3d at 1572.

       Therefore, whether the Miscellaneous Offshore Penalty is a “penalty” or merely a
“sum,” the language employed in plaintiffs’ complaint brings plaintiffs’ claims within the
coverage of I.R.C. § 7422(a). Based on the above discussion, plaintiffs’ claim for illegal
exaction does not fall within the jurisdiction of this court for failure to meet the jurisdictional
prerequisite of I.R.C. § 7422(a), and also because of the voluntary nature of Mrs. Jones’
acceptance of the Streamlined Procedures’ requirements and her payment of the
Miscellaneous Offshore Penalty.

                                        CONCLUSION

         For the reasons stated above, the defendant’s motion to dismiss Count One of
plaintiffs’ complaint for failure to state a claim and to dismiss Count Two for lack of
jurisdiction is GRANTED. The Clerk of the Court shall enter JUDGMENT consistent with
this Opinion.

       IT IS SO ORDERED.

                                                           s/Marian Blank Horn
                                                           MARIAN BLANK HORN
                                                                    Judge

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