Skip to Main Content

Zhanna Ziering Comments on Government Win Against $100,000 FBAR Cap

March 4, 2019, Tax Notes

Another district court has sided with the government in declining to hold that an old reg caps willful foreign bank account reporting penalties at $100,000.

. . .

The defendants also unsuccessfully asserted that the penalties assessed were an excessive fine that was unconstitutional under the Eighth Amendment.

The applicability of the excessive fines clause in the FBAR context is somewhat unsettled. United States v. Bajakajian, 524 U.S. 321 (1998), a frequently cited Supreme Court case on the matter, held that a punitive forfeiture is invalid only if it is “grossly disproportional to the gravity of the defendant’s offense.”

. . .

The parties had also previously settled trust fund penalties with the defendants paying $850,000. The defendants then contended that the penalties on the foreign trust should be counted in assessing an Eighth Amendment violation.

But the court held that the trust violation was “legally and factually distinct.” The penalties assessed were for a failure to file forms, not for the existence of an account, the court held. It also emphasized that only one of the 16 trust violations overlapped with the FBAR violation and that the IRS abated more than that one year’s amount as part of the settlement. Further, the court noted that the settlement amount could be applied to whatever trust penalty the agency decided, and therefore it was uncertain if any trust fund payment applied to the same year as the FBAR violation.

. . .

Zhanna A. Ziering of Caplin & Drysdale took issue with the court declining to consider the penalties for failure to file forms related to foreign trusts.

“The court’s refusal to consider Garrity’s penalties for failure to file forms 3520 and 3520-A in its Eighth Amendment analysis of the FBAR penalties disregards the fact that all of these penalties were imposed for Garrity’s failure to report largely the same assets, albeit on separate forms, and each of these penalties is a percentage of the assets’ aggregate value,” Ziering said. “This is particularly relevant since, as part of the Bajakajian analysis, the court must determine if the penalty is ‘grossly disproportional’ to the gravity of the offense.”

For the full article, please visit Tax Notes’ website (subscription required).

Excerpt taken from the article “U.S. Government Tallies Another Win Against $100,000 FBAR Cap” by Andrew Velarde for Tax Notes.


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
©2021 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)