# FBAR wilful penalty: standard of proof



## iota2014 (Jul 30, 2015)

> *Suit Challenges Preponderance of Evidence Standard in FBAR Case*
> The IRS improperly assessed a 50 percent penalty against a naturalized U.S. citizen for failing to file a foreign bank account report for 2008 because the agency applied the preponderance of evidence standard instead of the more rigorous clear and convincing standard, according to a lawsuit filed on December 15.
> 
> Bernhard Gubser, who was born in Switzerland, filed suit in the U.S. District Court for the Southern District of Texas, seeking a declaratory judgment that the IRS must establish that there had been a willful violation of the law to make a civil penalty stick under 28 U.S.C. section 2201. The issue of whether a declaratory judgment can be issued regarding an FBAR assessment had apparently never been addressed before the filing of the plaintiff's request[..]
> ...


http://www.anaford.ch/wp-content/up...idence_standard_in_fbar_case_-_2015-12-18.pdf


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## Bevdeforges (Nov 16, 2007)

Well, hooray for our side!!! Thanks for sharing.
Cheers,
Bev


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## iota2014 (Jul 30, 2015)

Apparently there's an ongoing debate among tax lawyers about what's meant by "wilful". The WSJ report on the Gubser case says:


> The rules for determining if an FBAR violation was willful have been evolving, according to Steven Toscher, an attorney with Hochman Salkin Rettig Toscher & Perez P.C. It is a “question of what is a person’s state of mind, which does not lend itself to bright-line rules,” Mr. Toscher said.
> 
> Mr. Toscher said the need for clarity has grown, as more hidden accounts surface.


Swiss-Banking Lawsuit Against IRS Could Have Wide Impact - WSJ

It's a pity that cases like this always seem to involve taxpayers with "bad bank" accounts. Maybe the IRS only tries to impose "wilful" penalties if they can at least satisfy the "preponderance of evidence" standard (e.g. by pointing to all the evidence against other "bad bank" accountholders)? Who knows.


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