FBAR Civil Willful Penalty Sustained Against Long Time Accountant and Tax Preparer Who Claimed He Did Not Have Time to Read the Schedule B Instructions (6/4/21)

In United States v. Kronowitz (S.D. Fla. No. 19-cv-62648
Findings of Fact and Conclusions of Law dated 6/3/21), CL here, the Court sustained
the Government’s assertion of the FBAR civil willful penalty.  The facts were bad for Kronowitz in trying to
avoid the penalty.  He was an accountant
and regular tax return preparer over many years.  He claimed inter alia (slip op. 11):

He admitted to seeing hundreds of Schedule Bs, and being
familiar with the purpose of Schedule B and its requirements, but testified
that he probably did not read the instructions because he was more concerned
with providing for his family and taking care of his clients. Indeed, he
testified that “my purpose in life at the time was to get clients, bill them,
and collect the money, not spending the whole year reading[.]”

Well, he lost.

JAT Comments:

1. Another example of a taxpayer who certainly knew about the
OVDP and for  some reason chose not to
timely join the program.  (Of course, he did
have some relationship to a UBS which could have meant that UBS turned his name
over  to the IRS early and thus was

2. The Court found the taxpayer was sufficiently reckless that he met the standard for willful for  the civil penalty.  The Court said that Kronowitz’s defense was that he was not “willful or reckless.”  As stated, Kronovitz’s argument was that willful and reckless are alternative bases for the penalty.  That is not true.  The statute imposes the penalty only on willful conduct which, for FBAR civil penalty purposes, is interpreted to include reckless conduct.