United States v. Peter Horowitz, 978 F.3d 80

Background

Peter and Susan Horowitz, U.S. citizens, held substantial Swiss bank accounts (FOCO/UBS → Finter) totaling roughly $1.6–2.0 million and did not report them on FBARs for years, including 2007–2008.
Peter opened a numbered Finter account in October 2008 (hold‑mail service); Susan became joint owner only after a 2009 visit (not a joint owner for 2008).
The Horowitzes used a long‑time U.S. accountant to prepare returns; they supplied summaries that omitted foreign accounts and signed returns that answered “No” to the Schedule B foreign‑account question.
They entered the IRS Offshore Voluntary Disclosure Program in 2010, filed amended returns and FBARs for some years, later opted out, and paid back taxes; they claim they only learned of the FBAR requirement in late 2009.
The IRS assessed enhanced (willful) FBAR penalties on June 13, 2014; the Horowitzes disputed willfulness and timeliness, the government sued to collect, and the district court granted summary judgment for the government (except Susan not liable for 2008 ownership). The Fourth Circuit affirmed.

Issues

Issue	Horowitzes' Argument	Government's Argument	Held
Whether civil “willfulness” for FBARs requires subjective knowledge (criminal standard) or includes recklessness	Willfulness requires knowledge that conduct was unlawful (Ratzlaf standard); recklessness insufficient.	Civil willfulness includes recklessness (objective high‑risk standard); Safeco supports different civil/criminal meanings.	Civil willfulness under 31 U.S.C. § 5321(a)(5) includes reckless conduct; recklessness suffices for enhanced civil penalties.
Whether undisputed facts show willfulness (i.e., recklessness) as a matter of law	Their lack of actual knowledge and routine trust in accountant precludes willfulness; at most negligence.	Their conduct (omitting large foreign accounts, not asking accountant, signing false returns, numbered/hold‑mail account) shows objective reckless disregard.	Undisputed record established objective recklessness: summary judgment for government on willfulness.
Whether 31 C.F.R. § 1010.820(g)(2) (1987 reg) caps willful penalty at $100,000 or the 2004 statute controls	The 1987 Treasury regulation still limits the maximum civil penalty to $100,000.	Congress amended § 5321 in 2004 to set the maximum as the greater of $100,000 or 50% of account balance; statute supersedes inconsistent regulation.	The 2004 statute controls; the 1987 regulation was abrogated; higher statutory maximum applies.
Whether deletion of the assessment date in Treasury database in Oct 2014 reversed the June 13, 2014 assessments and rendered suit untimely	Deleting the date removed the assessment from recorded status; reassessment occurred in May 2016, so suit was time‑barred.	The formal assessments were certified on June 13, 2014; the database deletion without signed reversing documentation did not legally undo the assessments.	Deleting the date in the database did not legally reverse certified assessments; penalties were timely assessed and enforcement timely filed.

Key Cases Cited

Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) ("willfully" in civil statutes can cover reckless conduct; civil/criminal meanings may differ)
Ratzlaf v. United States, 510 U.S. 135 (1994) (criminal willfulness requires proof of knowledge that conduct was unlawful)
Farmer v. Brennan, 511 U.S. 825 (1994) (civil recklessness defined as failure to act in face of an unjustifiably high risk that is known or obvious)
Global‑Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (willful blindness involves a subjective high‑probability awareness standard)
Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018) (civil FBAR willfulness includes recklessness; test for recklessness articulated)
Norman v. United States, 942 F.3d 1111 (Fed. Cir. 2019) (reaffirming that recklessness suffices for § 5321(a)(5) willfulness)
United Dominion Indus., Inc. v. United States, 532 U.S. 822 (2001) (agency regulations may lag behind statute and cannot thwart clear congressional changes)