Page 1 - United States v Edward Flume, Jr., Civ. 5:16-CV-73 (August 22, 2018)

Case 5:16-cv-00073 Document 56 Filed in TXSD on 08/22/18 Page 1 of 19
United States District Court
Southern District of Texas
ENTERED

UNITED STATESDISTRICT COURT August 22, 2018
SOUTHERN DISTRICT OF TEXAS David J. Bradley, Clerk
LAREDO DIVISION

UNITED STATESOF AMERICA §
§
VS. § CIVIL ACTION NO. 5:16-CV-73
§
EDWARD S. FLUME, JR. §

MEMORANDUM & ORDER

The Government brought this action to collect civil penalties assessed against Edward

Flume, a U.S. citizen, for failing to report his financial interest in a Swiss UBS bank account in

tax years 2007 and 2008. (Dkt. 1 at 1–3.) Under 31 U.S.C. § 5314, U.S. citizens with financial

interests in foreign bank accounts worth more than $10,000 must file a Report of Foreign Bank

and Financial Accounts—also known as an FBAR or a form TD F 90-22.1—by June 30of each

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year. Failureto do so can result in a penalty of up to $10,000. 31 U.S.C. § 5321(a)(5)(B)(i). But
if that failure is “willful,” the violator is instead subject to a penalty of up to 50% of the balance

of each account or $100,000, whichever is greater. Id. § 5321(a)(5)(C)–(D). Here, the IRS found

Flume’s failure to disclose his interest in the UBS account to be willful and accordingly assessed

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a penalty of $356,509 for 2007 and $100,000 for 2008. (Dkt. 1 at 7.) Flume did not pay, and

1 United States v. Williams, 489 F. App’x 655, 656 & n.1 (4th Cir. 2012); 31 C.F.R. §
1010.306(c).

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The IRS found that on June 30, 2008, the date the FBAR form for 2007 was due, the
UBSaccount had abalanceof $713,017.01. (Dkt. 51 at 25.) Fifty percent of that amount rounded
to thenearest dollar is$356,509. (Id.)

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On June 30, 2009, the date the FBAR form for 2008 was due, the UBS account balance
was zero because by then Flume had transferred all his assets out of the account. (Dkt. 51,
Attach. 27 at 12.) But he was still required to file an FBAR because the account “exceed[ed]
$10,000 . . . during the previous calendar year.” See 31 C.F.R. § 1010.306(c). Thus, he was
subject to the$100,000 penalty.

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