In mid-October the IRS filed a summary judgment motion seeking FBAR (Foreign Bank Account Report, Form TDF 90-22.1) penalties of over $225,000 for a civil failure to file an FBAR. This is only the second civil FBAR case that I am aware of which didn’t involve an underlying non-tax crime. According to District Court documents Jon McBride held offshore accounts totaling in excess of $1,000,000. The case was filed in Utah in April of 2009, but the IRS had assessed the FBAR penalties about 18 months earlier. The facts, at least as recited by the IRS in its motion, are problematic for the defendant. Allegations include:
* Offshore Entities Set Up by a Firm which in its brochures specifically advised of the requirement to file an FBAR
* Funneling of Corporate Earnings Back to McBride and Others through the Use of Loans and Other Devices
* McBride was advised by a Financial Consultant in writing that the Use of the Offshore Entities were Problematic, and gave him an article describing offshore bank scams.
* When questioned by an IRS Revenue Agent about offshore accounts McBride denied using them.
Sounds like McBride will have a tough time of it, although he hasn’t yet filed his opposition papers so we don’t know about his side of the story.