FBAR Law: Doctor Possibly Dinged Millions Over POA Misunderstanding

picture to acompany blog post about power of attorney FBAR caseHere’s another reminder to people with foreign bank accounts and holdings: Submitting FBAR paperwork is an annual must! Failure to comply will likely land you in legal trouble, saddled with a huge fine.

Take this recent case out of Florida. The IRS may force a U.S. taxpayer — whom we’ll call “Dawn” — to fork over $2.7 million for neglecting to report a handful of accounts in Europe and the Caribbean.

If you have funds sitting overseas and haven’t let the IRS know, you can’t afford not to read this quick post. It could mean the difference between losing and keeping millions.

If you have funds sitting overseas and haven’t let the IRS know, you can’t afford not to read this quick post. It could mean the difference between losing and keeping millions.

FBAR Lawsuit Background: Doctor Fails to Report Overseas Accounts

Case Basics

Claimant: The Internal Revenue Service (IRS)

Defendant: A Doctor in Florida (“Dawn”)

Accusation: The IRS contends that Dawn willfully failed to file annual disclosure reports, between 2007 and 2010, required under the Foreign Bank and Financial Accounts program (FBAR). The accounts in question are located in the British Virgin Islands, Liechtenstein, and Switzerland. Several of the holdings, over which she only had power of attorney signatory authority, belonged to her parents. Officials claim that they have contradicting evidence that may prove Dawn was aware of the accounts even though she says she wasn’t.

Defense: Even though she held a durable power of attorney over her parent’s holdings, Dawn maintains she wasn’t aware of several accounts. This is exceptionally common with people with parents are over 80.

Crux of FBAR Lawsuit: Power of Attorney Reporting Obligation Questions

Thus far, the adjudicating judge has reasoned that:

There is circumstantial evidence by which a trier of fact could reasonably infer that the defendant willfully failed to file FBARs for the five accounts at issue on summary judgment.”

Result: This FBAR delinquency case is set for trial.

The arguments will likely focus on Dawn’s knowledge of her parent’s accounts. Though she had a durable power of attorney, that doesn’t necessarily translate to awareness of every nook and cranny of her parent’s holdings — especially since Alzheimer’s disease and dementia play a role in her family’s story.

Ultimately, the government will have to prove that Dawn knew about the specific accounts in question.
United States taxpayers with signatory authority over foreign financial holdings in excess of $9,999 must report annually to the IRS. This includes people holding powers of attorney.

Who is Required to File FBAR Paperwork with Uncle Sam?

Every United States taxpayer with signatory authority over foreign financial holdings in excess of $9,999 must report it annually to the IRS. This includes people holding powers of attorney, not just primary account holders.

Ignorance is Rarely an Accepted Excuse in FBAR Cases

Dawn maintains that a tax attorney said she didn’t need to report accounts over which she was merely the power of attorney. Her judge, however, has ruled that relying on professional advice isn’t a strong enough defense for neglecting FBAR requirements.

As FBAR lawyers, we can attest to this. Judges rarely accept ignorance as a valid defense.

Judges rarely accept ignorance as a valid defense.

Connect with an FBAR Lawyer Today

Officials take FBAR reporting very seriously. If you’re in arrears or have failed to report, we can help.

The IRS is much more sympathetic to people who come forward. Things typically turn out better when you enlist an attorney to represent your interests and organize the case.

If you’re dealing with FBAR issues, get in touch today. Our team will help you sort through the bureaucracy, even if you’re drowning in decades-worth of unreported filings. We know the system and how to navigate it. We’ll make sure you arrive unscathed on compliant shores.

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