FBAR Penalties Survive Death

Charles (Chuck) Rubin
Contact

Gutter Chaves Josepher Rubin Forman Fleisher P.A.

The IRS may assess penalties for a person’s failure to file a required FBAR. If the person’s failure to file was willful, the IRS can impose a penalty equal to 50% of the account balance or $100,000, whichever is greater.  If an individual dies, can the IRS assess and collect an FBAR penalty for failing to disclose a foreign account?

Absent some specific direction by Congress, whether an action created by federal statutory law survives the death of the plaintiff is a matter of federal common law. Generally, under federal common law, a claim survives death and can be enforced if it is remedial and not punitiveSharp v Ally Fin., Inc., 328 F.Supp 3d 81, 88-89 (E.D.N.Y. 2018). Tax penalties are typically considered remedial and not punitive because their purpose is to reimburse the government for the costs of investigation and enforcement. Estate of Kahr, 24 AFTR 2d 69-5332 (CA 2 1969).

A potential 50% penalty looks to many as being punitive. However, in a Federal District Court case, the court ruled that FBAR penalties come under these general rules and are remedial and can be assessed and collected post death.

Taxpayers who are not disclosing their foreign accounts should take this liability into account - that is, the risk of penalty is not just on them but will be on their heirs as to their inheritances if a penalty is imposed before or after death.

Wolin, 126 AFTR 2d ¶2020-6348 (DC NY 9/28/2020)

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.

© Charles (Chuck) Rubin, Gutter Chaves Josepher Rubin Forman Fleisher P.A. | Attorney Advertising

Written by:

Charles (Chuck) Rubin
Contact
more
less

Gutter Chaves Josepher Rubin Forman Fleisher P.A. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.