Do FBAR penalties survive death? According to a new court\nruling, the answer is clearly yes (unfortunately).<\/p>\n\n\n\n
In United States v. Gill, 2021 U.S. Dist. LEXIS 12203 (S.D.\nTex. 6\/30\/21), the court ultimately held that an FBAR nonwillful penalty\nsurvives the death of the person subject to the penalty. In the case, the United States filed a\ncomplaint against Jagmail Gill, asserting that Mr. Gill, who became a green\ncard holder and later a citizen of the United States, failed to report any of\nhis foreign income on his originally filed U.S. income tax returns for 2005\nthrough 2010. He also did not file an FBAR to report that he had signature\nauthority, control or authority over, or an interest in numerous foreign bank\naccounts that had an aggregate balance of more than $10,000. The Government asserted that the failures to\nfile were non-willful, but assessed FBAR Penalties of $740,848 for Mr. Gill\u2019s\nnon-willful failure to timely file FBARs reporting his financial interest in\nthe foreign bank accounts.<\/p>\n\n\n\n
While the case was pending, Mr. Gill passed away. In\nresponse, the government filed a motion to appoint and substitute a personal\nrepresentative for Mr. Gill\u2019s estate. Mr. Gill\u2019s counsel filed an opposition,\narguing that the Government\u2019s claims did not survive death, so no\nrepresentative was needed.<\/p>\n\n\n\n
The decision turned on whether the FBAR nonwillful penalty\nwas remedial or penal in nature. The\ngeneral rule is that remedial liabilities survive death, but penal liabilities\ndo not. Where the cause of action is not\nclearly in these categories, the decision is made by \u201cprimary purpose of the\nstatute.\u201d Applying these tests, the Court determined that the FBAR civil\nnonwillful penalty was remedial, which survives death and becomes an estate\nliability. Many cases in the past have held that the FBAR willful penalty, which\ntypically produces larger penalties than would have applied under the\nnonwillful penalty was remedial, thus permitting the penalty to survive death.<\/p>\n\n\n\n
The court ruling is one more ugly reminder that FBARs must be filed to avoid possible penalties in the future (and after death). Furthermore, estate executors must vigilantly review FBAR filing obligations of the decedent to see if any FBARs were missed. If any FBARs are unfiled it would be wise to file them under one of the IRS\u2019 voluntary\/amnesty disclosure programs to correct errors and become compliant before any penalties accrue.<\/p>\n","protected":false},"excerpt":{"rendered":"
Do FBAR penalties survive death? According to a new court ruling, the answer is clearly yes (unfortunately). In United States v. Gill, 2021 U.S. Dist. LEXIS 12203 (S.D. Tex. 6\/30\/21), the court ultimately held that an FBAR nonwillful penalty survives the death of the person subject to the penalty. In the case, the United States […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"1","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4014","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=4014"}],"version-history":[{"count":1,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4014\/revisions"}],"predecessor-version":[{"id":4015,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4014\/revisions\/4015"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=4014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=4014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=4014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}