Posted by: Taxlitigator | May 29, 2014

Zwerner: Jury Determines 150% FBAR Penalty Applies – Excessive Fines Clause to the Rescue??


  1. While post-trial arguments were pending on whether the Zwerner penalties violate the constitutional prohibition against excessive fines, the parties filed a notice with the court that the case has settled with Mr Zwerner agreeing to 50% FBAR penalties assessed against him for 2004 and 2005 in the amounts of $723,762 and $745,209 respectfully, interest thereon of $21,336.11 and $20,947.52 respectively, plus statutory penalties that have accrued under 31 U.S.C. § 3717(e)(2) on the FBAR penalty assessments for 2004 and 2005 of $128,016.64 and $125,685.11 respectively.

    U.S. taxpayers should carefully review the underlying factual scenario set forth in U.S.A. vs. Carl R. Zwerner before making a decision to pursue any form of voluntary disclosure regarding previously undisclosed interests in a foreign financial account. Many taxpayers are considering opting out of the OVDP – some might reconsider in light of the jury verdict in Zwerner for multiple FBAR penalties. Various taxpayers who have opted out of the OVDP have already received notices asserting multiple FBAR penalties for the years involved.

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