Tom Zehnle Quoted on FBAR Penalty Case Reversal in Tax Notes Today

"FBAR Penalty Case Reversal Raises Questions About Civil Willfulness Standard"
Tax Notes Today

Tom Zehnle was quoted regarding an appeals court’s recent unpublished reversal of a previous dismissal of the government’s attempts to enforce collection of civil penalties for failure to file foreign bank account reports. The decision concerns some tax practitioners who say the government will now be allowed to apply a new willfulness standard that is contrary to long-held judicial interpretation.

Zehnle said application of the circuit court's legal analysis in future cases would upend longstanding precedent. "I hope that taxpayers will continue to challenge the theory of willful blindness in criminal tax cases, and that the Supreme Court will ultimately address the issue. It is hard to believe that a court would assume constructive knowledge of a legal duty in the case of any taxpayer who uses a return preparer and did not themselves scrutinize each line of the tax return to understand what obligations they might have under instructions or other forms," he said. "I find that extremely troubling, because there are two separate duties involved: one is to comply with tax obligations under Title 26, and the other is to file a Treasury report under Title 31."

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