Case Termination on FBAR Penalty Remand Proper, Court Holds

Tax litigation attorney James Dawson spoke with Tax Notes about a district court finding that it properly terminated a foreign bank account reporting (FBAR) case after partially remanding the penalty assessment to the Internal Revenue Service (IRS) for recalculation. In the article, Mr. Dawson explains that because the holding allowed the court to close the case and send it back to the agency for consideration, the government will be presented with two separate statute of limitations issues. The first question is if the government produced a new penalty, would the court view it as a new assessment?

“Under title 26, a court clearly would. The United States will have to dissuade the court that the concept of assessment under title 26 applies to title 31,” Mr. Dawson stated.

The second issue is whether the two-year statute of limitations on a potential new collection action was closed.

“As the court no longer has jurisdiction, it appears that the United States will have to commence a new action," Mr. Dawson explained. "Query: Will it be timely? As there is no tolling, the statute of limitations may have expired.”

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