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Media & Articles

White Collar Principal Hardy and Associate Kendall Author Two Part Guest Blog on Offshore Compliance Issues for Procedurally Taxing

March 23, 2015

In a March 23 and 24 two part guest blog post for Procedurally Taxing,Internal Investigations & White Collar Defense Principal Peter D. Hardy and Associate Carolyn H. Kendall, examine a recent National Tax Advocate Report regarding offshore account enforcement. 

In Part 1, Mr. Hardy and Ms. Kendall note: 

"Although the Report contains many good proposals, we focus here on just one, which seems to strike at the heart of the many critiques raised over the years regarding the perceived inequities in the structure and application of the IRS’s various offshore voluntary disclosure (OVD) programs. The OVD programs have netted many people who may have inadvertently failed to file FBARs, and who are not wealthy people with substantial accounts. As the Report explains, uncertainty has compelled some individuals who never committed fraud to resign themselves to significant civil penalties because '[b]enign actors cannot be sure that IRS will not view their FBAR violations as ‘willful,’ and attempt to impose severe penalties. This is because the government has eroded the distinction between willful and non-willful violations.'"

 

 

 

In Part 2, they discuss the standard necessary to prove willfulness for failing to file a Report of Foreign Bank and Financial Accounts (FBAR), noting:

"Some court opinions have eroded that willfulness standard in the civil FBAR context, a trend that leads us to agree with the recommendation made by the January 14, 2015 Report of the National Taxpayer Advocate that the willfulness requirement for civil FBAR actions be amended legislatively to reflect that willfulness requires not mere recklessness, but a voluntary and intentional violation of a known legal duty."