District Court of Connecticut Expands Scope of Willfulness Requirement for FBAR Violations

A new U.S. District court case has zeroed in on the definition of “willful” for purposes of applying the more serious penalties for failure to file tan FBAR. In U.S. v. Garrity, 2018 U.S. Dist. LEXIS 56888 (D. Conn. 2018), the United States District Court of Connecticut dealt taxpayers with undisclosed foreign accounts a hard blow. In advancing to the next stage of trial, the court said that the IRS could prove the elements of its FBAR penalty claim by a mere preponderance of the evidence. What's more, the IRS can carry its burden to prove willfulness by showing reckless conduct by the taxpayer, as opposed to the more stringent "intentional violation" standard required in the criminal context. In this podcast, I discuss the Garrity case and what it means for taxpayers with unreported foreign accounts. I also provide some background about the FBAR requirement and get into a robust discussion about the term, "willfulness" and willful blindness. Finally, I provide examples of situation