FBAR Penalty to Face Excessive Fines Clause Test

Tax Controversy Watch

Today’s blog post is authored by Jed Silversmith, a former federal prosecutor and member of the Washington State bar who recently joined Blank Rome in its Philadelphia office.  Mr. Silversmith has applied to reactivate his Pennsylvania bar license and is awaiting approval of that application.

Last week, a federal jury in Miami found that Carl Zwerner had willfully failed to disclose his foreign bank account to the Treasury Department for calendar years 2004, 2005 and 2006. Zwerner now potentially owes the United States 150% of the value of his account plus an additional statutory assessment of 12% and interest. Zwerner’s account balance was roughly $1,500,000, resulting in a penalty of about $2,500,000. Another hearing is set in the case for June 6, 2014 where the district court will consider how it intends to compute a civil penalty. Zwerner will likely argue that this 150% penalty violates the Excessive Fines Clause…

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