Court Sanctions Taxpayer in $4.3M Foreign Bank Account Case

The court in U.S. v. Monica Toth (U.S. District Court for the District of Massachusetts) sanctioned taxpayer in an FBAR penalty suit.

The government filed a complaint to collect a civil penalty against Taxpayer for her alleged failure to timely report her financial interest in a bank account opened at UBS AG in Switzerland for the 2007 calendar year.

After the government advised taxpayer that it was seeking to collect nearly $2M in FBAR penalties and to retain an attorney, the taxpayer opted to represented herself.

Taxpayer failed to answer the complaint and the court also advised taxpayer to retain an attorney given the extensive amount of penalties involved.

After failing to meet discovery deadlines and continuously disregarding the court’s orders, the government filed a motion to impose sanctions — to which taxpayer did not respond to either.

The court grants the government’s motion for sanctions and orders that the following facts be taken as established:

  1. Defendant had legal control over, and the legal authority to direct the disposition of the funds in, the Account (and any sub-accounts), by investing the funds, withdrawing the funds, and/or transferring the funds to third-parties, between the date the Account was opened and at least December 31, 2008.

  2. Should the United States establish that Defendant is liable for the penalty alleged in the complaint, for the purposes of calculating the amount of such penalty, the Account (and any sub-accounts) contained $4,347,407 as of the penalty-calculation date.

  3. Defendant had a legal obligation to timely file an FBAR regarding the Account in each calendar year that the Account was open, including with regard to calendar year 2007.

  4. Defendant willfully failed to file an FBAR regarding the Account with respect to calendar year 2007.

The court also awarded legal costs and fees to the government.