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Florida Man Hit with Record Tax Penalty on Swiss Bank Account

751px-American_Cash.JPGA jury in Miami recently found that a Coral Gables man could owe civil penalties of $2.24 million for a secret Swiss bank account he held, Bloomberg reported. This sum is noteworthy due to its large size. What makes it especially significant is that the account in question only held $1.5 million in it. The taxpayer's lawyers described the 150% penalty as record-setting in terms of percentage.

Carl Zwerner, a specialty glass importer, opened a Swiss bank account in the 1960s. Unfortunately for Zwerner, a new federal law in 2004 raised the penalty for failing to file a Report of Foreign Bank and Financial Accounts, or FBAR. The new law stated that, for each year a taxpayer willfully failed to file his FBAR, he could face a penalty of 50% of the balance of the foreign account(s) in question. The jury in Zwerner's case concluded that he willfully failed to submit FBARs in 2004, 2005 and 2006. Because the taxpayer's account balance hovered just near $1.5 million during that period, that meant his penalty amounted to just under three times $750,000, or nearly $2.25 million.

With the new reporting requirements of the Foreign Account Tax Compliance Act coming online soon, many other taxpayers could find themselves in Zwerner's shoes as institutions across the globe -- including Swiss banks -- are disclosing account holder information to the IRS.

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