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US Contends Engineer Owes $4.3M In Willful FBAR Penalties

US Contends Engineer Owes $4.3M In Willful FBAR Penalties

An engineer and business owner owes more than $4.3 million in foreign bank account reporting penalties for willfully failing to disclose overseas accounts to the Internal Revenue Service, the U.S. government told a California federal court Friday.

In the case of U.S. v. Laura Kim, case number 2:21-cv-06746, in the U.S. District Court for the Central District of California the US stated that Kim willfully failed to disclose some of her foreign bank accounts on the Reports of Foreign Bank and Financial Account she filed for 2009 through 2012, the U.S. told the California federal court in a complaint. While she filed forms for those four years reporting some accounts, she failed to report all her accounts at Woori Bank, a financial institution in South Korea, according to the complaint.

Kim, an ecological engineer who immigrated to the U.S. in 1968, had up to 29 accounts in those four years, and her combined balances at one point averaged more than $8 million. She reported two to four of those accounts every year from 2009 through 2012 on her FBARs but failed to report others, the U.S. said.

Kim agreed in 2018 to extend the government's deadline for assessing the FBAR penalties, and the government assessed around $1 million in penalties for each year, bringing the total to around $4 million, according to the complaint. The government is seeking $4.3 million, which includes the FBAR penalties, interest and late payment penalties for her failure to pay the assessment, according to the complaint.

Tax returns filed with the IRS for Kim's 2009 through 2012 tax years also understated her individual tax liabilities in failing to report interest income she earned on her foreign accounts, the government said. It did not specify the total tax understatement for those years.

People with foreign bank accounts have several U.S. reporting requirements for those overseas activities, including the FBAR. Those forms generally need to be filed for accounts with balances exceeding $10,000 and, for years before 2017, needed to be filed by June 30 for the previous tax year, according to the U.S.

Penalties for failing to abide by these reporting requirements differ on whether the violation was willful or nonwillful. Penalties for intentional violations are either $100,000 or half of the account balance, whichever is greater, according to the complaint. Kim had indicated on some of her returns that she did not have interests in or authority over foreign bank accounts, the U.S. said.

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Read more at: Tax Times blog

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