United States v. Horowitz, No. 19-1280 (4th Cir. 2020)Annotate this Case
For the purpose of applying 31 U.S.C. 5321(a)(5)'s civil penalty, a "willful violation" of the Report of Foreign Bank and Financial Accounts (FBARs) reporting requirement includes both knowing and reckless violations, even though more is required to sustain a criminal conviction for a willful violation of the same requirement under section 5322.
The Fourth Circuit affirmed the district court's conclusion that the undisputed facts establish that defendants' failure to file the FBARs for 2007 and 2008 was objectively reckless. In this case, among other things, defendants knew that they were holding a significant portion of their savings in a foreign bank account and earning interest income on that account; defendants knew that interest income was taxable income and that foreign income was taxable in the United States; and defendants reported interest income to their accountant from domestic banks and foreign income earned in Saudi Arabia but failed to report foreign interest income. Furthermore, the Finter Bank account was a numbered account with "hold mail" service; the Swiss bank accounts were by no means small or insignificant and thus susceptible to being overlooked by defendants; and defendants stated that they did not have a foreign bank account on their tax returns. The court also affirmed the district court's conclusion that the civil penalty for a willful FBAR violation is established by 31 U.S.C. 5321(a)(5)(C)–(D), not 31 C.F.R. 1010.820(g). Finally, the civil penalties against defendants were timely assessed, and the enforcement action was timely filed.