U.S. District Court Gives Partial Victory to Taxpayer in FBAR Enforcement Case and IRS Issues Interim Guidance to Improve Administration of FBAR Penalties

On July 24, 2015, U.S. District Court Judge Richard A. Jones, U.S. District Court in Seattle, Washington, upheld the IRS’s assessment of FBAR penalties against James Moore of $10,000 for each year from 2005 through 2008, but stated that the IRS’s conduct in assessing the FBAR penalties was arbitrary and capricious in not explaining the penalties and assessing interest and other parties.  As a result, the court voided the IRS’s assessment of interest and other penalties. Already on May 13, 2015, the IRS issued Interim Guidance for FBAR Penalties to implement procedures to improve the administration of the Service’s FBAR compliance program.