Government Files Suit to Reduce FBAR Penalties to Judgment

UNITED STATES OF AMERICA,
Plaintiff,
v.
MARGARETA B. TONISSON,
Defendant.

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

CHARLES J. BUTLER
BORIS BOURGET
Trial Attorneys, Tax Division
U.S. Department of Justice
P.O. Box 683
Washington, D.C. 20044
202-514-6062 (v-Butler)
202-307-2182 (v-Bourget)
202-307-0054 (f)
Charles.J.Butler@usdoj.gov

Of Counsel:
BILLY J. WILLIAMS
U.S. Attorney, District of Oregon

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

COMPLAINT

 Plaintiff United States of America alleges as follows:

1. The United States brings this action to reduce to judgment civil penalty assessments against Margareta Tonisson, pursuant to 31 U.S.C. § 5321(a)(5). These penalties, commonly known as “FBAR penalties,” arise from Ms. Tonisson's failure to timely report her financial interest in, or signatory authority over, foreign bank accounts for the 2011, 2012, and 2013 calendar years, as required under 31 U.S.C. § 5314 and related regulations.

2. The IRS Chief Counsel, a delegate of the Secretary of the Treasury, has authorized this action, which the United States brings at the direction of a delegate of the Attorney General, pursuant to 31 U.S.C. § 3711(g)(4)(C).

JURISDICTION AND VENUE

3. This Court has jurisdiction over this action under 28 U.S.C. §§ 1331, 1345, and 1355.

4. Venue properly lies in the District of Oregon under 28 U.S.C. §§ 1391(b)(1) and 1395(a) because the Defendant resides within this judicial district and because a substantial part of the events or omissions giving rise to the claim occurred within this judicial district.

THE DEFENDANT

5. Defendant Margareta B. Tonisson resides in Multnomah County, Oregon, and was a resident of the United States during the calendar years at issue.

FOREIGN BANK OR FINANCIAL ACCOUNT REPORTING REQUIREMENTS

6. Federal law requires every resident or citizen of the United States who has a financial interest in, or signatory or other authority over, a bank, securities, or other financial account in a foreign country to report that relationship to the Department of Treasury for each year in which the relationship exists. See 31 U.S.C. § 5314(a); 31 C.F.R. § 1010.350(a).

7. To fulfill this requirement, such a U.S. resident or citizen must file with the IRS a “Report of Foreign Bank and Financial Accounts,” commonly known as an “FBAR.” To report information for all years through 2012, the proper FBAR form was Form TD F 90-22.1. To report information for 2013 and subsequent years, the proper FBAR form is FinCEN Form 114.

8. For each of the calendar years at issue in this action, an FBAR was due no later than June 30 of the subsequent calendar year with respect to foreign financial accounts with an aggregate balance exceeding $10,000. See 31 C.F.R. § 1010.306(c).

9. Any United States resident or citizen who fails to comply with the FBAR reporting requirements may be subject to a civil penalty. For violations involving the non-willful failure to report an interest in a foreign account, the maximum civil penalty that the Department of Treasury may impose for each violation is $10,000. See 31 U.S.C. § 5321(a)(5).

10. Beginning in 2009, the IRS developed voluntary disclosure programs for taxpayers with undisclosed income from foreign financial accounts. The programs involve, among other things, paying taxes, interest, and penalties, and they generally eliminate the risk of criminal prosecution. The Offshore Voluntary Disclosure Initiative (OVDI) is one such program.

MS. TONISSON'S VIOLATIONS OF FBAR REPORTING REQUIREMENTS

11. Margareta Tonisson is a permanent U.S. resident. She has a history of failing to file FBARs since 2003, despite having interests in foreign bank accounts with annual aggregate balances exceeding $10,000. On December 8, 2010, Ms. Tonisson, jointly with her husband, submitted an application to enter the IRS's OVDI program with respect to years going back to 2003. In that application, Ms. Tonisson acknowledged that (1) she had bank accounts at six different foreign banks; (2) the highest aggregate annual balance for these accounts was between $100,000 and $1 million; (3) these foreign accounts generated income that Ms. Tonisson did not report on tax returns; and (4) the source of the funds in these foreign accounts was an inheritance from her husband's mother.

12. On May 13, 2011, the IRS sent Ms. Tonisson a letter explaining that, to participate in the OVDI program, Ms. Tonisson needed to provide documentation for the tax years covered by the voluntary disclosure. The letter requested delinquent or amended returns reporting income from any foreign bank accounts, Treasury Forms TD F 09.22-1, copies of bank statements for any foreign accounts, and other relevant documents. On August 6, 2012, and March 27, 2013, the IRS again sent Ms. Tonisson letters requesting the same information, which she had not provided.

13. On May 6, 2013, the IRS sent Ms. Tonisson a fourth letter requesting the same information. On May 20, 2013, Ms. Tonisson responded, through a power of attorney, providing copies of tax returns for 2003, 2008, and 2010 and a copy of an FBAR form for 2010. In addition, Ms. Tonnison claimed that she did not have to file tax returns for the 2004 through 2007 years.

14. Based on its examination of Ms. Tonisson's foreign accounts, the IRS reached a different conclusion. The IRS determined that income earned from Ms. Tonisson's foreign accounts alone was sufficient to require that she file tax returns for the 2004 through 2007 years. Moreover, Ms. Tonisson did not provide reasons for failing to file FBAR forms for 2003 through 2008. In addition, Ms. Tonisson did not provide reasons for failing to file FBAR forms for 2009, 2012, and 2013; for failing to file a timely FBAR form for 2010; and for filing an incomplete FBAR form for 2011.

15. The IRS prepared a closing report for Ms. Tonisson's case, with which Ms. Tonisson disagreed. Ms. Tonisson then opted out of the OVDI program.

16. During calendar years 2011 through 2013 — the years at issue in this case — Ms. Tonisson still had at least seven bank accounts at various banks in Europe. The aggregate balance of these foreign accounts exceeded $10,000 during each of these years.

2011

17. In 2011, Ms. Tonisson had interests in the following foreign accounts:

18. The aggregate balance of the foreign accounts listed in Paragraph 17 exceeded $10,000 in U.S. currency at some point during 2011.

19. Ms. Tonisson filed an FBAR, though untimely, for 2011. On that FBAR, however, she failed to report her interest in the Handelsbank account ending in 4-358. Ms. Tonisson otherwise failed to disclose that interest by the applicable deadline.

20. Ms. Tonisson's failure to report her interest in the Handelsbank account ending in 4-358, in a year for which she was required to file an FBAR, constitutes a violation of the FBAR filing requirements.

2012

21. In 2012, Ms. Tonisson had an interest in the following foreign accounts:

22. The aggregate balance of the foreign accounts in listed Paragraph 21 exceeded $10,000 in U.S. currency at some point during 2012.

23. Ms. Tonisson did not file an FBAR or otherwise disclose her interests in the foreign accounts listed in Paragraph 21 by the applicable deadline.

24. Each instance of Ms. Tonisson's failure to report her interest in each of the foreign financial accounts listed in Paragraph 21, in a year for which she was required to file an FBAR, constitutes a separate violation of the FBAR filing requirements.

2013

25. In 2013, Ms. Tonisson had an interest in the following foreign accounts:

26. The aggregate balance of the foreign accounts listed in Paragraph 25 exceeded $10,000 in U.S. currency at some point during 2013.

27. Ms. Tonisson did not file an FBAR or otherwise disclose her interests in the foreign accounts listed in Paragraph 25 by the applicable deadline.

28. Each instance of Ms. Tonisson's failure to report her interest in each of the foreign financial accounts listed in Paragraph 25, in a year for which she was required to file an FBAR, constitutes a separate violation of the FBAR filing requirements.

CLAIM FOR RELIEF — REDUCE FBAR PENALTIES TO JUDGMENT

29. The United States incorporates by reference Paragraphs 1 through 28.

30. On September 28, 2017, the IRS timely assessed a civil FBAR penalty of $10,000 against Ms. Tonisson for failing to report her interest in the Handelsbank account ending in 4-358 for calendar year 2011.

31. On May 3, 2018, the IRS timely assessed civil FBAR penalties against Ms. Tonisson of $10,000 per account for failing to report her interests in each of the foreign bank accounts listed in Paragraph 21, for a total of $60,000 in FBAR penalties for calendar year 2012.

32. Also on May 3, 2018, the IRS timely assessed civil FBAR penalties of $10,000 per account for failing to report her interests in two of the foreign bank accounts listed in Paragraph 25, for a total of $20,000 in FBAR penalties for calendar year 2013.

33. The IRS made the assessments stated in Paragraphs 30 through 32 pursuant to 31 U.S.C. § 5321(a)(5)(B), which imposes a penalty not to exceed $10,000 for each non-willful violation of the FBAR filings requirements in 31 U.S.C. § 5314.

34. On September 28, 2017, the IRS provided Ms. Tonisson notice, and demanded payment, of the FBAR penalty for 2011.

35. On May 18, 2018, the IRS provided Ms. Tonisson notice, and demanded payment, of the FBAR penalties for 2012 and 2013.

36. Despite receiving notice and demand for payment, Ms. Tonisson has not paid the outstanding FBAR penalties described in Paragraphs 30 through 32.

37. Pursuant to 31 U.S.C. § 3717(a)(1), the United States is entitled to recover prejudgment interest that has accrued on Ms. Tonisson's unpaid FBAR penalties.

38. Pursuant to 31 U.S.C. § 3717(e)(2), the United States is entitled to recover a penalty for Ms. Tonisson's failure to pay a lawful debt owed the United States.

39. Pursuant to 31 U.S.C. § 3717(e)(1), the United States is entitled to recover the cost of processing and handling Ms. Tonisson's unpaid FBAR penalties.

40. Ms. Tonnisson is thus liable to the United States for $90,000 in FBAR penalties for 2011 through 2013, plus $8,078.78 in interest, failure to pay penalties, and costs of collection, pursuant to 31 U.S.C. § 3717, as of September 26, 2018.

41. The United States is entitled to recover $98,078.78, as of September 26, 2018, plus interest, penalties, and costs accruing from that date.

WHEREFORE, the United States respectfully requests that the Court:

Dated: September 17, 2019

Respectfully submitted,

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

CHARLES J. BUTLER
BORIS BOURGET
Trial Attorneys, Tax Division
U.S. Department of Justice
P.O. Box 683
Washington, D.C. 20044
202-514-6062 (v-Butler)
202-307-2182 (v-Bourget)
202-307-0054 (f)
Charles.J.Butler@usdoj.gov

Of Counsel:
BILLY J. WILLIAMS
U.S. Attorney, District of Oregon

Attorneys for United States of America