United States v. Williams, U.S. District Court, E.D. Virginia | September 1, 2010 | O’Grady, J. | No. 1:09–cv–437

United States v. Williams, U.S. Court of Appeals, Fourth Circuit | July 20, 2012 | Shedd, J. | No. 10-2230

United States v. Williams, U.S. District Court, E.D. Virginia | June 26, 2014 | O’Grady, J. | No. 1:09–CV–00437

Short Summary: Government brought action seeking to enforce civil penalties assessed against taxpayer for his failure to report his interest in two foreign bank accounts for tax year 2000. The United States District Court for the Eastern District of Virginia, Liam O’Grady, J., 2010 WL 3473311, entered judgment in favor of taxpayer, and government appealed. The Court of Appeals, Shedd, Circuit Judge, held that taxpayer’s undisputed actions established reckless conduct, which satisfied the proof requirement for willfulness under Internal Revenue Code section requiring annual report of any financial interests in any bank, securities, or other financial accounts in a foreign country.

Key Issue: Whether defendants violation of FBAR reporting requirements was willful.

Primary Holdings:

  • Taxpayer’s undisputed actions established reckless conduct, which satisfied the proof requirement for willfulness under Internal Revenue Code section requiring annual report of any financial interests in any bank, securities, or other financial accounts in a foreign country.

Key points of law:

  • Taxpayer’s undisputed actions established reckless conduct, which satisfied the proof requirement for wilfulness under Internal Revenue Code section requiring annual report of any financial interests in any bank, securities, or other financial accounts in a foreign country; taxpayer’s signature was prima facie evidence that he knew the contents of his return, and the directions to see instructions for filing FBAR (Report of Foreign Bank and Financial Accounts) with the Department of the Treasury, taxpayer made a conscious effort to avoid learning about reporting requirements, and his false answers on both the tax organizer and his federal tax return evidenced conduct that was meant to conceal or mislead sources of income or other financial information, and taxpayer acknowledged that he willfully failed to report the existence of his Swiss bank accounts to the IRS or Department of the Treasury as part of his larger scheme of tax evasion.

United States v. Williams – writeup

Defendant Bryan Williams opened two bank accounts at a Swiss bank called Agricole Indosuez in the name of his British corporation, ALQI Holdings.[1] From 1993-2000, Williams deposited over $8 million in assets into the account and earned over $800,000.[2] For tax year 2000, he did not disclose the account on an FBAR form, and expressly indicated on his return that he did not have any interest in a foreign bank account.[3] In 2002, on the advice of counsel, he disclosed the accounts as part of the Offshore Voluntary Compliance Initiative.[4] He also filed amended tax returns in 2003 disclosing the accounts from tax years 1999 and 2000.[5] That same year he agreed to plead guilty to criminal tax evasion and conspiracy to defraud the United States.[6] In 2007, Williams filed an FBAR form for all required tax years since 1993, including 2000.[7]

At issue was when Williams first met with Swiss authorities and when the ALQI accounts were frozen by the Swiss bank.[8] The government pointed to inconsistent testimony that Williams gave in a prior case, and Williams pointed to the fact that the IRS determined that the Swiss account was frozen in 2000.[9] The district court accepted Williams’s argument, and proceeded with the fact that Williams met with authorities in Switzerland in 2000 about the ALQI accounts and the authorities then froze the account in response to a request from the U.S. government.[10]

[1] U.S. v. Williams, No. 1:09–cv–437, 2010 WL 3473311, at *2 (E.D. Va. Sep. 1, 2010).

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id. at *3.

[9] Id.

[10] Id.