Tax Analysts Speaks to Scott Michel: FBAR Penalty Guidance Reflects Sensitivity to U.S. Constitutional Concerns

Tax Analysts

Scott D. Michel spoke with Tax Analysts regarding recent guidance from the IRS on the civil penalties for failure to file foreign bank account reports, which could reflect a concern that penalties up to the statutory limit might run afoul of the Eighth Amendment to the U.S. Constitution.  For more on the story, please see Tax Analysts' website (subscription required).

Excerpt taken from the article "FBAR Penalty Cap Reflects Sensitivity to U.S. Constitutional Concerns"  by Andrew Velarde for Worldwide Tax Daily.

"The IRS's position looks quite reasonable and is to be commended," Scott D. Michel of Caplin & Drysdale Chtd. told Tax Analysts. It appears to reflect sensitivities over the argument in the Eighth Amendment against excessive fines and penalties and may make it more likely that non-offshore voluntary disclosure program penalty cases will settle before the court action necessary for the government to collect the Title 31 penalty, he said.

. . .

"The guidance is important and obviously may change the 'risk calculus' for a few taxpayers still on the fence about entering OVDP, especially if they are at a '50 percent bank,' but OVDP, and certainly the streamlined programs, still represent a pretty good deal in most cases compared even to the new parameters," Michel said.


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