My basic question is: What are the legal implications of a law that has been on the books for 30 years and never enforced until recently. I'm inquiring about the situation thousands of Americans find themselves in relative to the FBAR (Foreign Bank Reporting Requirements which are part of the Banking Secrecy Act passed in the 1970's) which the IRS has suddenly decided to enforce. My inquiry is specifically about people who have dutifully reported all their income foreign and domestic and reported the existence of the foreign accounts on their 1040 but never knew they had to file a form 90-22.1.
Can the government come in 30 years later without notifying people individually and hand out multiple $10,000 fines for not submitting a piece paper? At the very least, is this not a violation of the 8th Amendment of the Constitution?
1 Answer from Attorneys
The legal implications are that the government can and will enforce this requirement. Ignorance of the law is not a defense, but it can be a mitigation. Perhaps you noticed the off-shore voluntary compliance initiative that the IRS promoted strongly through the print media last year? An important component of the benefits from participating in the program was significant relief on the failure to file FBARS. The penalties vary significantly depending on whether the non-filing was an oversight or intentional. Since this specific voluntary disclosure program ended last October, the navigation of this issue is trickier, but not impossible. If you need assistance, please contact me for a conference. Thank you.
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