Accounting
FBAR penalties: ‘Grossly disproportionate’ | Accounting Today
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The Bank Secrecy Act of 1970 required the Treasury to promulgate regulations requiring United States citizens to report any “transaction” or “relation” with a “foreign financial agency.” Consequently, the Treasury created the Report of Foreign Bank and Financial Accounts form, known as the FBAR. Each American citizen with interests in or authority over any foreign bank account with a balance exceeding $10,000 must file an annual FBAR with the IRS identifying and describing that account.
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The Eleventh Circuit noted that the only other circuit court to have addressed the question as to whether FBAR penalties are fines within the meaning of the Eighth Amendment was the First Circuit, which recently held that the Excessive Fines Clause does not apply to FBAR penalties.
“After examining the historical development of the Excessive Fines Clause and the FBAR’s text, structure and history, we decline to follow the First Circuit,” the court wrote. “Rather, we hold that FBAR penalties are in substantial measure punitive in nature. Therefore, under controlling Supreme Court precedent, they are subject to review under the Eighth Amendment’s Excessive Fines Clause. And in this case, examining the penalties assessed against Schwarzbaum account by account, as we must, we identify $100,000 in penalties levied against one account in each of the years 2007-2009, for a total of $300,000, that are grossly disproportionate to the offense of concealing that account, and are therefore in violation of the Excessive Fines Clause.”
“We also hold, however, that the other penalties levied against the remaining accounts did not violate the Excessive Fines Clause because the penalties assessed against them were not grossly disproportionate to Schwarzbaum’s willful concealment of tens of millions of dollars in overseas accounts,” the court added.
Robbin Caruso, a partner at Top 100 Firm Prager Metis and co-manager of its National Tax Controversy practice, regularly represents taxpayers assessed with substantive and potentially financially devastating FBAR penalties. “I am hopeful that the Supreme Court will address this issue now that the Eleventh Circuit Court of Appeals has called such penalties ‘grossly disproportionate to the offense’ of concealing an account,” she said. “Even in cases where reasonable cause exists, rectifying the penalties on these FBAR violations is a time-consuming and expensive endeavor for the taxpayers involved. Whether or not the excessive fines clause applies directly to FBAR penalties, these penalties will remain at front and center due to this split.”
The court noted that even cases where the penalty is merely partially punitive would still be subject to review under the Eighth Amendment ban. But although the court trimmed Schwarzbaum’s total penalties by $300,000, it remanded his case to the district court for the entry of a judgment in the amount of $12,255,813, plus the calculation of late fees and interest.
Aprio, a Top 25 Firm based in Atlanta, has acquired JMS Advisory Group, a firm that specializes in unclaimed property compliance and escheat process development, also based in Atlanta
Financial terms of the deal were not disclosed. Aprio ranked No. 24 on Accounting Today’s just released
JMS was founded in 2006 and helps clients mitigate risk and capitalize on opportunities through managed unclaimed property compliance. The team includes attorneys, CPAs, CFEs and others.
JMS has a wide range of clients, including enterprise companies, financial institutions, credit unions, insurance companies, hospitality and health care organizations.
“As Aprio continues its rapid growth, we are committed to expanding our services to meet the evolving needs of our clients,” said Aprio CEO Richard Kopelman in a statement Tuesday. “The addition of JMS gives us the opportunity to continue strengthening our position as a future-focused advisory firm. JMS’s focus on escheat management and asset recovery not only enhances our current capabilities but also allows us to deliver even more impactful solutions to help businesses navigate complex compliance challenges.”
JMS president and CEO James Santivanez is joining Aprio as a partner and provides guidance to clients on unclaimed property and state and local tax issues.
“We created JMS to make an impact nationally in the unclaimed property consulting industry, and I’m proud of our nearly 20-year history of helping clients mitigate risk and capitalize on opportunities resulting from accurate and properly managed unclaimed property compliance,” Santivanez said in a statement. “Joining with Aprio takes us to the next level, allowing us to build upon our success while providing even greater value to our clients. This is an exciting next step in our journey.”
JMS founder and director Sherridan Santivanez is also joining Aprio as a partner. He specializes in representing clients before state enforcement authorities and managing complex audits and voluntary disclosures for some of the world’s largest companies. She provides strategic guidance on audit preparation and navigates interactions with state and third-party auditors.
Aprio received a
The American Institute of CPAs and the National Association of State Boards of Accountancy are asking for comments on their proposal for an additional pathway to CPA licensure through
The AICPA and NASBA proposed the
The UAA changes would:
- Enable states to adopt a third licensure pathway that requires earning a baccalaureate degree with an accounting concentration, completing two years of professional experience as defined by Board rule, and passing the Uniform CPA Examination;
- Shift to an “individual-based” mobility model, which allows CPAs to practice in other states with just one license; and
- Add safe harbor language to ensure CPAs who meet existing licensure requirements preserve practice privileges.
The proposals come as several states are already moving forward with their own changes, including
The updates reflect feedback gathered during a late 2024 exposure draft period and forward-looking solutions being advanced by state CPA societies and boards of accountancy to increase flexibility for licensure candidates while maintaining the integrity of the CPA license.
The AICPA and NASBA are asking for comments on the proposed changes by May 3, 2025. They can be submitted through this
The UAA offers state legislatures and boards of accountancy a national model they can adopt in full or in part to meet the licensure needs of each jurisdiction.
The proposal would maintain the current two pathways to CPA licensure:
- Earning a post baccalaureate degree with an accounting concentration, completing one year of professional experience as defined by Board rule, and passing the CPA exam; and,
- Earning a baccalaureate degree with an accounting concentration, plus an additional 30 semester credit hours , completing one year of professional experience as defined by Board rule, and passing the CPA exam.
Small business employment held steady last month, according to payroll company Paychex, while wage growth continued below 3%
The
“Our employment data continues to show moderate job growth and wage growth below three percent,” said Paychex president and CEO John Gibson in a statement Tuesday. “The consistent long-term trend we’re seeing is a small business labor market that is resilient and stable with little job movement among workers. At the same time, small business owners are optimistic about future business conditions despite uncertainty about how to adapt to a rapidly evolving legislative and regulatory landscape.”
The Midwest remained the top region in the country for the ninth consecutive month with a jobs index level of 100.54. Seven of the 20 states analyzed gained more than one percentage point in February, led by Texas (up 2.11 percentage points).
Phoenix (101.92) increased its rate of small business job growth for the fourth month in a row in February to rank first among the largest U.S. metros.
Construction (3.29%) regained its top spot among industries in terms of hourly earnings growth in February, followed closely by “other services” (3.27%) and manufacturing (3.21%).
The pace of job growth in manufacturing gained 2.39 percentage points to 99.52 in February, the industry’s biggest one-month increase since April 2021.
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