Tuesday, October 5, 2021

SC Confirms That 2004 Law Increased $100,000 FBAR Limit By Not Hearing Challenge To FBAR Penalty Case

According to Law360, a New York woman's attempt to avoid a penalty of nearly $700,000 for failing to file foreign bank account reporting forms ended Monday after the U.S. Supreme Court declined to take up her case.

Alice Kimble had argued in Alice Kimble v. United States, case number 20-1697, in the U.S. Supreme Court that the Federal Circuit erred by upholding a ruling that she willfully failed to file the reports, known as FBARs, justifying a penalty that was excessive. Her penalty was calculated under Title 31, Section 5321 of the U.S. Code, which was amended in 2004 increasing penalties for willful violations of FBAR requirements to either $100,000 or 50% of the balance in the foreign account, whichever was higher.

Kimble claimed her failure to file a report wasn't willful because she did not know it was required. Even if it was willful, the penalty would still be limited to $100,000 because the IRS failed to draft regulations for the amended statute.

The dispute involved bank accounts with UBS in Switzerland and at HSBC in Paris. Kimble's father had opened the UBS account after surviving the Holocaust. Fearing a similar tragedy would happen in the U.S. motivated him to maintain the account for more than three decades in case the family needed to flee.

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