Woman's Heirs Say IRS Misled Her Into Paying $157K Penalty

2022-06-02 08:11:12

According to the lady's heirs, the IRS "lured" an older woman into reimbursing a $157,000 penalty for failing to register her overseas bank accounts with the false claim of dismissing her outstanding tax debt.
 
Margaret J. Jones paid the penalty to partake in a streamlined program to address non-willful tax liability, as promised by the Internal Revenue Service. In a suit filed Tuesday, her estate claimed that the IRS accused her of wilfully neglecting to file, resulting in a $3.4 million tax obligation.
 
According to the suit, Jones passed in March at 93, legally blind and in bad physical condition. She and her late husband had financial accounts in Canada and New Zealand that neglected to report on the Foreign Bank and Financial Accounts Reporting System.
 
According to federal law, U.S. citizens and legal residents holding $10,000 or more in an overseas bank or financial accounts must submit FBARs with the Treasury Department's Financial Crimes Enforcement Network, or FinCEN.
 
According to the law suit, Margaret Jones engaged in an IRS program called "streamlined filing compliance procedures" for domestic people in 2015 to settle her tax difficulties. It stipulated that she pay a $156,795 "miscellaneous offshore penalty" of 5%. According to the lawsuit, the government acknowledged that her inability to file was due to carelessness, inadvertence, or a good-faith misunderstanding of the law. It would not pursue any additional sanctions against her.
 
According to the estate, the government broke its promise. Jones was subjected to a "very extensive and rigorous" audit, which resulted in a $3.4 million fine. Despite the government learning, they imposed the penalty owed her a $16,000 refund, as per the suit.
 
According to the estate, the IRS broke its agreement with Jones and wrongfully imposed the 5% miscellaneous offshore penalty. It claimed that because there is no mention of a 5% MOP in federal legislation, there is no legal or legislative authority to levy the amount.
 
Jones filed a lawsuit in federal district court for unlawful exaction, according to the complaint. Due to the COVID-19 epidemic, the case has been delayed indefinitely.
 
Margaret Jones' legal lawyers did not reply to calls for comment. The U.S. Department of Justice's spokeswoman refused to comment.
 
Margaret Jones is represented by Procopio Cory Hargreaves & Savitch LLP's Patrick W. Martin.

We could not reach the government's legal representation.
 
Stephanie L. Flint and David J. Jones, as Executors of Margaret J. Jones' Estate v. the United States of America, Department of the Treasury, Internal Revenue Service, case number 21-1202 C in the United States Court of Federal Claims.