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United States v. Agrawal

United States District Court, E.D. Wisconsin

December 9, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
RAM K. AGRAWAL, Defendant.

          ORDER

          LYNN ADELMAN DISTRICT JUDGE.

         Through this action, the United States of America seeks to enforce civil penalties against Ram Agrawal for his alleged non-willful failure to timely report his financial interest in or authority over certain foreign bank accounts. Agrawal has represented himself throughout this litigation. Now before me is the United States' motion for summary judgment.

         I. BACKGROUND

         Ram Agrawal was born in India and moved to the United States in or around 1970. He is a United States citizen. He completed his graduate education in the United States, and then worked in the United States as a geophysicist and later as a math instructor at the Milwaukee Area Technical College. He received an inheritance from his parents in the form of CDs that were held in India. In or around 2002, Agrawal renewed or purchased new CDs at the State Bank of India. Some of these new CDs matured in 2004 and the remainder matured in 2006.

         In September 2004, Agrawal and his wife jointly opened an account at UBS, a Swiss investment bank. Agrawal used money from CDs in India that were maturing to fund the UBS account. Agrawal directed UBS to invest the money in non-US SEC funds, which would be non-taxable. The maximum value of the UBS account was $999, 350 in 2006; $967, 129 in 2007; $930, 531 in 2008; and $671, 425 in 2009. In 2009, UBS notified Agrawal that it intended to close the account. In 2010, Agrawal closed the account and received a check from UBS for $671, 424.65, which was the remaining account balance.

         Under Treasury Department regulations in effect during the period when Agrawal held the UBS account, he was required to report the account to the Treasury Department every year. 31 C.F.R. §§ 103.24, 103.27 (2009). The regulations required him to use a form prescribed by the Secretary of the Treasury: Form TD F 90-22.1, Report of Foreign Bank and Financial Account, commonly referred to as an “FBAR.” However, for each of years 2006, 2007, 2008, and 2009, Agrawal failed to submit timely FBARs with respect to the UBS account. He also failed to report the State Bank of India CDs, the UBS account, or the gain or loss from the UBS account on his tax returns for those years.

         At his deposition, Agrawal testified that he prepared his own tax returns in 2006 and 2007, but relied on CPAs to prepare his tax returns in 2008 and 2009. He testified that he did not tell the CPAs of the existence of the UBS account. Regarding the 2008 tax return preparation, Agrawal testified as follows:

Q. Did [the CPA] ask you whether you had a foreign financial account?
A. I said no.
Q. You told him no?
A. Yes.
Q. But at this time you still had the UBS account, correct?
A. Yes.
Q. Why did you tell [the CPA] no?
A. Because again, the word of [the UBS representative] that these-this account is not-non-taxable in the U.S. …
Q. You didn't tell [the CPA] that you had a UBS account but were told that it was non-taxable and didn't ...

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