Why the Arthur Bedrosian meeting with Mr. FBAR is important
The Bedrosian FBAR case is an incredibly important victory for taxpayers. Judge Baylson first ruled that FBAR “willfulness” in the “civil” context did NOT require knowledge that filing an FBAR was a legal duty (the criminal standard). He then ruled that Mr. Bedrosian’s failure to report the account was a form of negligence that did NOT meet the required standard of “willfulness”.
Perhaps the message is:
The failure to file an FBAR will be “willful”, if the circumstances of the failure, were evidence of conduct that the FBAR statute was designed to punish.
In other words, it is possible to know about Mr. FBAR, fail to file Mr. FBAR and NOT be “willful”!
The “Readers Digest” Version …
The Bad …
The District Court held that the test for what constitutes “willfulness” in the “civil FBAR penalty” context is not the test used in a criminal context – “the intentional violation of a known legal duty”. All that is required is that the person voluntarily NOT file an FBAR. (One need not know that he is violating a legal duty).
The Good …
The failure to file an FBAR can be a form of “negligence” that falls short of “willfulness”. In other words, one can know about the FBAR requirement, fail to file the FBAR and still fall short of “willfulness”.
The Ugly …
The IRS had initially taken the position that Mr. Bedrosian’s
misadventures in FBAR were nonwillful. But, they changed their mind.
Round 1 goes to Mr. Bedrosian. Will the IRS appeal?
Mr. Bedrosian has earned a place in FBAR history. He is a true “FBAR Pioneer”. His “Adventures in FBAR” place him in the club of: Mr. Pomerantz, Mr. Hom , Mr. Kentera, Mr. Horsky and Mr. Warner. Fortunately, mere visitors to American do not yet have to file the FBAR. Interestingly, Mr. FBAR appears to have been the “role model” for a Russia foreign bank account reporting laws.
To learn more about the FBAR Odyssey of Mr. Arthur Bedrosian …