Lawyers for a 87 year-old man in Florida said that a federal jury has found their client to have owed the US government civil penalties worth 150% the value of his Swiss bank account. They have noted that the penalty was the biggest such imposed based on percentage on record.
According to jurors in a Miami court yesterday, Carl Zwerner should pay a 50% penalty on the annual value of his Swiss bank account in 2004, 2005 and 2006 for intentionally failing to file a Report of Foreign Bank and Financial Accounts, or FBAR, which is a US Treasury form. Bloomberg said that the FBAR penalty on Zwerner was unusual as the Internal Revenue Service has sought half of the accused's bank account for each of the four years he has filed to file te required tax form in a civil case, and not a criminal one. The jurors have also found that Zwerner did not owe a penalty for the year 2007.
Martin Press, Zwerner's lawyer, has cried foul over the hefty fines. He said in a phone interview, "They can get 50 percent for the non-filing of one piece of paper, and 200 percent for the non-filing of four pieces of paper. The question is whether such a massive penalty is appropriate for simply a disclosure form which carries no tax."
The news agency reported that prosecutors and the IRS have used civil FBAR penalties more often as a weapon in their criminal crackdown on overseas tax evasion. The penalties are often harsh, at most times exceeding criminal fines. Majority of over 70 taxpayers who have been charged beginning 2009 have reportedly pleaded guilty and have paid FBAR fines of half the amount of the high account balance for only one year.
Because of the threat of penalties, Bloomberg said it had helped drive US taxpayers into an amnesty program of the IRS, wherein holders of offshore accounts that were undeclared can avoid further prosecution. Under the amnesty program, holders pay back taxes, fines and penalties and advise the tax agency which banks and bankers had aided them in hiding their assets. Over 43,000 Americans have joined in the amnesty program since its establishment in 2009, which also resulted in $6 billion in payments in the process. Last week, Credit Suisse AG also submitted a guilty plea in aiding Americans to evade taxes and also agreed to pay $2.6 billion in penalties as well.
The US Justice Department said in a separate statement that US District Judge Cecilia Altonaga, who will be hearing arguments on whether the fines imposed against Zwerner violate the constitutional prohibition against excessive fines, will be the one to decide on the size of the jury's judgement.
