Tag Archives: FBAR willfulness

Williams case reversed – “willfulness” no longer means “willful” – Judges legalize IRS tyranny

Updated July 22, 2016 – almost four years to the day of the original post

I am updating this post to appear in the “Looking For Mr. FBAR” series of posts. A previous post confirmed that to impose a “willful FBAR penalty”, the government must prove that the failure to file the FBAR was the result of “the intentional violation of a known legal duty. Clearly this is a question of fact. The post was and is to explore the extent to which knowledge of the FBAR requirement can be inferred from Schedule B and other facts surrounding the preparation of the tax return.

I have updated this post to include third commentary on the impact of the Williams case. This post is now divided into two parts.

Part A – The original 2012 post

Part  B – The 2016 updates: The third party commentary on Williams

Part A – The original 2012 post

As you know, Mr. FBAR is a particularly nasty piece of work. Absent a showing of “reasonable cause”, Mr. FBAR opens the door to a sliding scale of penalties. In the past I have written about Mr. FBAR and the non-willfulness penalty structure. This post is about “willfulness.” Specifically, what constitutes “willfulness”? Conviction for the “willful” failure to file an FBAR comes with “unspeakably high penalties”. So, I won’t speak of them here. The non-willful penalties are bad enough. But, the penalties for “willfulness” clearly invite 8th amendment (“excessive fines”) scrutiny. This is certain to come. In fact, it may well be that the next step in the “Williams saga” will be just that.

The Williams Saga

A brief overview of the Williams saga may be found courtesy of Robert Wood here and Jack Townsend here (appellate decision) and here (initial trial decision). Before analyzing these decisions and considering what they may mean, it is important to understand that this is not a situation of the IRS attempting to target a taxpayer whose sole sin was  a failure to file FBARs. Mr. Williams, by his own admission was a willful tax evader. In addition, he failed to file FBARs. What is interesting is that the IRS decided to go after him for FBAR violations as well. Why? I haven’t a clue. I am not sure if I see a purpose to it. But maybe the IRS simply lacks purpose … Continue reading