The U.S. District Court for the Southern District of Florida recently held that the statute of limitations for assessment of the FBAR penalty may be waived by the person against whom the penalty is assessed. In United States v. Solomon, No. 20-82236-CIV-CAN, 2021 U.S. Dist. LEXIS 210602 (S.D. Fla. Oct. 27, 2021), the Court concluded that the limitations period for assessment may be waived, even where the period for assessment has expired. In addition, the Court held that the assessment of the Non-Willful FBAR penalty is per account, rather than per form.

In the instant case, the Taxpayer failed to file FBARS for the tax years 2004-2010.  On March 13, 2012, the Taxpayer filed her delinquent FBARS as part of the Taxpayer’s participation in the Offshore Voluntary Disclosure Program (“OVDP”).

According to the facts outlined by the Court, Ms. Solomon then signed two Consent Agreements (the “Agreement”) entitled: “Consent to Extend the Time to Assess Civil Penalties Provided for by 31 U.S.C. § 5314.” The first Agreement, dated August 26, 2013 extended the statute of limitations to December 31, 2015.  Subsequently, the Taxpayer signed a second Agreement dated February 10, 2017, which extended the statute of limitations to December 31, 2018.

The Taxpayer and her tax advisor also signed Form 13349 (Agreement to Assessment and Collection of Penalties) on November 17, 2018, wherein the Taxpayer agreed to the assessment of Non-Willful FBAR penalties totaling $200,000. The total amount assessed represents the $10,000 Non-Willful FBAR penalty for each of the accounts for each of the tax years 2004-2010. Based upon the Taxpayer’s execution of the Agreements and Form 13349, the IRS assessed the agreed upon penalties on December 12, 2018.

The Taxpayer elected to forego paying the FBAR penalties, resulting in the United States filing suit in the early part of December 2020 in the District Court, seeking to reduce the assessment of the Non-Willful penalties to a judgment. In response to the Complaint, on February 1, 2021, the Taxpayer filed a Motion for Partial Summary Judgment (the “Motion”) in an attempt to limit the FBAR penalties to $70,000. The Taxpayer also argued in her Motion that the FBAR penalties should be assessed on a per form basis rather than based on a per account basis.

The Taxpayer’s  moving papers asserted that the Statute of Limitations for the tax years 2004-2009 should be time barred by reason of  31 U.S.C. § 5321 (b)(1).  In addition, the Taxpayer maintained that non-willful violations of 31 U.S.C. 5314 should be assessed on a per form basis rather than a per account basis.

The Taxpayer’s position is based upon the premise that the Agreements she signed did not have the effect of extending the statute of limitations, since the limitation periods had already expired.


In particular, the Taxpayer asserted that by the time she signed the first Agreement on April 26, 2013, the six year statute of limitations for the tax years 2004-2006 had already expired.  With respect to the tax years 2007-2009, the Taxpayer conceded that the first Agreement extended the statute of limitations until December 15, 2015, but maintained  that the April 26, 2013 Agreement had already expired by the time she signed the second Agreement on February 10, 2017.

In response to the Taxpayer’s Motion, the Government filed a Cross Motion for Partial Summary Judgement. In its Cross Motion, the Government argued that pursuant to 31 U.S.C. § 5321(b) (1), the six year statute of limitations is non-jurisdictional in nature, and as such, waivable. They also argued that the Taxpayer clearly and knowingly waived the limitations period by signing the two Agreements and Form 13349.

In addition, the Government argued in its Cross Motion that under the plain text and structure of Bank Secrecy Act and implementing regulations, the assessment of the Non Willful FBAR Penalties should be per account and not per form.

It is noteworthy that the procedural history of this case fails to mention whether the  Taxpayer opted out of or was removed from the OVDP, since the miscellaneous offshore penalty provided for in the  last iteration of the OVDP was a one-time  27.5% penalty based upon the highest aggregate balance in any one of the years in the disclosure period. The assessment of the Non-Willful FBAR penalties rather than the 27.5 miscellaneous offshore penalty under the OVDP suggests that the Taxpayer either opted out of or was removed by the IRS from participation in the OVDP.

The statute of limitations under 31 U.S.C. § 5321(b) (1) provides:

“The Secretary of the Treasury may assess a civil penalty under subsection (a) at any time before the end of the 6-year period beginning on the date of the transaction with respect to which the penalty is assessed.”

In its analysis, the Court stated:

“The key inquiry in determining if a limitations period can be waived is  whether the waiver limits courts’ subject matter jurisdiction—in which case its time bar is not waivable—or is instead a non-jurisdictional claim processing rule—in which case waiver is permissible.”  (See U.S. Dept. of Lab. v. Preston, 873 F.3d 877, 881 (11th Cir. 2017) (citing In re Pugh, 158 F.3d 530, 543 (11th Cir. 1998)).”

The Court concluded that 31 U.S.C. § 5321 (b) (1) did not operate as a limitation on the Court’s jurisdiction. The Court quoting from United States v Schwarzbaum 18-CV-81147, 2019 WL3997132, at *4 (S.D. Fla. Aug. 23, 2019) stated:

‘If a statute is not jurisdictional, then as merely an affirmative defense, the statute of limitations can be waived by the parties even for claims that have expired.’

In deciding in favor of the United States, the Court noted the absence of any reference to the Court’s jurisdiction in Section 5321 (b) (1), and concluded that the statute merely operates as an affirmative defense.

The Court also rejected the Taxpayer’s claim that she did not knowingly waive the limitations period when she signed the two Agreements, stating that:

“The language is clear, unambiguous, and unlimited…..”

Finally, the Court rejected the Taxpayer’s argument that the assessment of the Non-Willful FBAR Penalty should be assessed per form rather than per account.  In its decision, the  Court, citing United States v. Boyd, 991 F.3d 1077 (9th Cir. 2021), where the Court rejected the  Government’s position on the issue), observed that, with the exception of one case, Courts have consistently held that the assessment of the Non-Willful FBAR penalty is per account and not perform.

Signing an Agreement can have far reaching consequences for a Taxpayer and should first be carefully evaluated with an experienced tax attorney. In addition, the Taxpayer needs understand the context in which the waiver is being presented, as well as the expiration of the statute of limitations for each of the years in question.

This case is unclear as to whether Taxpayer opted out of or was removed from the OVDP, and if so, whether the assessment of the Non-Willful FBAR penalties exceeded the amount the Taxpayer would have otherwise paid under the OVDP.

Equally unclear is whether the Taxpayer’s tax advisor ever discussed the option of filing an appeal with the IRS. In some instances, Taxpayers have achieved favorable results in appeals.