Case: Court of Appeals Rules Reckless Conduct Meets Willfulness Standard for Enhanced FBAR Penalties, Upholds 6 percent Late Payment Penalty (2d Cir.)

The U.S. Court of Appeals for the Second Circuit held that reckless conduct satisfies the willfulness requirement for enhanced civil penalties under the Bank Secrecy Act for failing to file a Report of Foreign Bank and Financial Accounts (FBAR), affirming the district court’s grant of summary judgment to the government. Taxpayers, a married couple, had a foreign bank account containing over $2 million that comprised 75-90 percent of their wealth. They failed to report the account on their tax returns or file FBARs for multiple years, despite being asked about foreign accounts by their accountant and on tax forms. The ...