Kenneth G. Kronowitz was born on
March 21, 1937. He is married to Sybil Kronowitz and has three children.
He graduated from the University of Miami with a
degree in accounting in 1961. From 1961 to present, Kronowitz has
been a licensed certified public accountant ("CPA").Since
becoming an accountant in 1961, Kronowitz has always been a sole practitioner. Since 1962, Kronowitz has typically prepared approximately
thirty (30) to forty (40) federal income tax returns annually for both
individuals and businesses. In order to maintain his CPA license,
Kronowitz was required to take at least forty (40) hours of Continuing
Professional Education ("CPE") classes annually. However, Kronowitz does not recall the FBAR being mentioned in any of
the CPE courses he has taken. He considers himself to be
semi-retired, as he still prepares approximately ten or twelve returns per year
for others for money.
prepared his own tax returns for tax years 2005, 2006, 2007, 2008, 2009, and
2010. On the Schedule B forms filed with the 2007 and 2008 tax returns, in
response to question 7a, Kronowitz marked "no." There were no
Schedule B forms attached to the 2006, 2009, or 2010 individual tax returns.
Question 7a on Schedule B states, "At any
time during [applicable year], did you have an interest in or a signature or
other authority over a financial account in a foreign country, such as a bank
account, securities account, or other financial account? See page B-2 for
exceptions and filing requirements for Form TD F 90-22.1." Kronowitz also
prepared the tax returns for the Trust for tax years 2008, 2009, and 2010. He
marked "no" in response to question 3 under the "Other
Information" section on Form 1041, which states, "[a]t any time
during calendar year [ ], did the estate or trust have an interest in or a
signature or other authority over a bank, securities, or other financial
account in a foreign country?"
insists that he did not look up Form TD F 90.22.1 (the FBAR) due to a mistaken
lack of knowledge, not a "desire to cheat the government."
provided notice of the FBAR penalty assessments, which remain unpaid. In
addition to the amount of the assessments, interest and failure to pay
penalties have accrued; and as of August 12, 2020, the balance owed on the FBAR
penalties, including accruals, is $791,742.63.
in the Motion for
summary judgment, the Governmen's t argues the Kronowitz's FBAR violations were
willful because he recklessly failed to report his interest in foreign accounts
or was willfully blind to the FBAR requirement. In support of its argument, the
Government contends that the facts establish that Kronowitz recklessly opened the
Cayman Island accounts to hide assets, that he recklessly managed the UBS and
BKB bank accounts in Switzerland, and that his repatriation of funds into the
United States and reporting of gains on the Trust tax returns formed part of a
scheme to protect his foreign investment gains, which required planning,
direction, and knowledge of international taxes and management of wired funds
across international borders. Thus, the Government argues, "[i]t is
implausible that Kronowitz could have known how to operate this process . . .
without ever seeing the FBAR requirement."
the Government's argument itself demonstrates why summary judgment is
inappropriate in this case. First, contrary the Government's suggestion, upon
summary judgment, the Court views the facts in the light most favorable to
Kronowitz and draws inferences from those facts in favor of Kronowitz as the
non-moving party. Crocker, 886 F.3d at 1134.
Kronowitz disputes that his actions comprised any scheme to "cheat the
government," and insists that he was simply mistaken. Significantly, in
order to make the determination, the Court would be required to weigh the
evidence and consider Kronowitz's credibility, which it may not do at summary
judgment. Strickland, 692 F.3d at 1154.
In arguing that
summary judgment is appropriate in this case, the Government relies primarily
upon the Fourth Circuit's opinion in Horowitz, in which the court stated that
"willfulness based on recklessness is established if the defendant '(1)
clearly ought to have known that (2) there was a grave risk that an accurate
FBAR was not being filed and if (3) he was in a position to find out for
certain very easily.'" United States v. Horowitz, 978 F.3d 80, 89 (4th
Cir. 2020) (quoting Bedrosian, 912 F.3d at 153).
the court determined that, despite their contentions regarding their subjective
intent, the defendant taxpayers' failure to file FBARs was objectively
reckless. 978 F.3d at 89. However, the Government's reliance is misplaced for
the simple reason that the district court in Horowitz was considering cross
motions for summary judgment.
other cases relied upon by the Government do not support the conclusion that it
urges here—that the Court may determine the issue of willfulness as a matter of
law upon summary judgment. See United States v. Williams, No. 1:09-cv-437, 2010
WL 3473311, at *1 (E.D. Va. Sept. 1, 2010) (finding no willfulness following
bench trial), rev'd 489 F. App'x at 660; Bedrosian, 912 F.3d at 148 (same);
Bohanec, 263 F. Supp. 3d at 888-89 (finding willfulness following bench trial).
whether Kronowitz was willfully blind based upon the facts in this case
requires a determination of his subjective awareness and whether he purposely
avoided learning the facts pointing to liability. Williams, 489 F. App'x at 658
(citation omitted). "As a general rule, a party's state of mind (such as
knowledge or intent) is a question of fact for the factfinder, to be determined
after trial." Chanel, Inc. v. Italian Activewear of Fla., Inc., 931 F.2d
1472, 1476 (11th Cir. 1991).
Second, in this
case, genuine issues of material fact bearing upon the issue of willfulness
remain. In pertinent part, although it is undisputed that Kronowitz has been a
licensed CPA for fifty-nine years, has prepared returns on behalf of both
companies and individuals during the course of his career, and was required to
attend CPE courses, Kronowitz testified that he did not deal with foreign tax
issues for his clients, he did not remember any of the CPE courses mentioning
the FBAR, and he was unaware of the FBAR until 2011. Accordingly,
the Government's Motion for summary judgment was DENIED.
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