Department of Justice Sues Taxpayer to Collect $3.5 Million in FBAR Penalties, Possibly Putting Dutch Bank ABN AMRO's Swiss Operations on IRS's Enforcement Radar


Carl R. Zwerner of Miami, Florida, is facing nearly $3.5 million in civil penalties for failing to report a Swiss bank account, according to a lawsuit filed by the Justice Department (United States v. Zwerner, S.D. Fla., No. 1:13-cv-22082).

The lawsuit, filed on June 11, alleges that Zwerner failed to file Form TD F. 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for an account at Dutch bank ABN AMRO’s Swiss operation from 2004 to 2007. Judging by the complaint, Zwerner appears to have put himself in the IRS’s cross hairs by doing a “quiet disclosure” of his account. In other words, he simply filed his delinquent FBARs and amended tax returns without entering the IRS’s voluntary disclosure program. Interestingly, he filed the first of the delinquent FBARs “on or about October 13, 2008,” which was before the IRS created the 2009 Offshore Voluntary Disclosure Program.

Zwerner bolstered the IRS’s argument that his failure to file was willful by holding the account in nominee names, including the Bond Foundation and the Livella Foundation.

The IRS appears to have asserted the 50% willful FBAR penalty against Zwerner for each year, resulting in a penalty that greatly exceeds the balance of the unreported account. It appears from the complaint that the highest balance in the account was $1.7 million. In contrast, the IRS asserted FBAR penalties of  $3,488,609.33, which the Department of Justice now seeks to reduce to judgment.

The action comes less than three weeks before a June 30 deadline for employees and officers to report signature authority over certain foreign financial accounts on the FBAR.


Topics:  DOJ, FBAR, Foreign Bank Accounts, IRS, Penalties, Tax Returns

Published In: Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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