If you’re an American living abroad with foreign bank accounts, this recent federal court decision is a must-read. The story of Ricky Don Debrick, an energy consultant residing in France, is a stark reminder of the risks of failing to comply with U.S. reporting requirements, even from overseas.
Ricky Don Debrick, was an American energy consultant residing in France and owner of International Oil & Gas Associates, was ordered by a D.C. federal court to pay more than $2 million in penalties. This was due to his willful failure to disclose multiple foreign bank accounts with balances exceeding $3 million, far surpassing the under $30,000 he initially reported on his 2010 FBAR (Report of Foreign Bank and Financial Accounts) filing. Debrick also failed to timely file an FBAR for 2011, despite having at least six accounts with balances totaling nearly $3 million in 2010 and $3.4 million in 2011.
The U.S. government discovered the undisclosed accounts after Hyposwiss Private Bank, under a Swiss Bank Program nonprosecution agreement, revealed them. This program allows Swiss banks to avoid U.S. criminal charges by cooperating and sharing information about American clients suspected of hiding assets.
How Did the Court Reach Its Decision?
Debrick never responded to the U.S. Department of Justice’s 2024 complaint, which led the court to issue a default judgment affirming the government’s allegations and the penalties assessed in 2022. The court found Debrick’s actions, such as moving funds between banks and lying under penalty of perjury about his control of the accounts and related trusts, amounted to willful concealment.
Chief Judge James E. Boasberg wrote that “either willful blindness or reckless disregard satisfies the mental state required” for such FBAR violations. Debrick’s case is a cautionary tale for any American with assets abroad. The U.S. government is aggressive in pursuing offshore account violations, and international banks are increasingly likely to cooperate. If you have undisclosed foreign accounts, consult a tax professional immediately, before the IRS finds you first.
Why Did the Penalty Reach $2 Million?
For willful FBAR violations, the penalty can reach up to 50% of the highest account balance or $100,000, whichever is greater. With account balances in the millions, Debrick’s penalty quickly ballooned. Notably, the court pointed out that had Debrick come forward honestly through a voluntary disclosure program, he could have resolved the issue for a reduced penalty. Instead, he attempted to use a defunct IRS program and submitted false statements, which only made matters worse.
Key Takeaways for U.S. Expats
· Full Disclosure Is Critical: U.S. citizens must report all foreign financial accounts if the aggregate balance exceeds $10,000 at any time during the year.
· Willful Noncompliance Is Costly: The penalties for intentionally hiding accounts are severe and can amount to half of the undisclosed assets.
· International Cooperation Is Increasing: Programs like the Swiss Bank Program mean that foreign banks are more likely than ever to report U.S. account holders.
· Voluntary Disclosure Works—If Done Honestly: The IRS offers (or has offered) programs for voluntary disclosure, but they require full honesty and timely action.
Final Thoughts
Debrick’s case is a cautionary tale for any American with assets abroad. The U.S. government is aggressive in pursuing offshore account violations, and international banks are increasingly likely to cooperate. If you have undisclosed foreign accounts, consult a tax professional immediately, before the IRS finds you first.
an Offshore Bank or Financial Advisors?
Sources:
3. https://www.justice.gov/tax/swiss-bank-program
4. https://gordonlaw.com/learn/irs-voluntary-disclosure-program/
Read more at: Tax Times blog
