Don't Let Friends Take Tax Advice From Friends! [Court Case Series]
How a $2 million Swiss bank account led to a $250,000 penalty. Your friends' tax strategy might be a disaster waiting to happen...
If you were growing up in India in the 80’s, you will remember this moment!
The one where you ask your parents if you could do something because your friends were. Instead of a simple “no,” they hit you with: “Would you jump off a bridge if your friend did it?”
I got that question a lot as a kid. Annoying? Absolutely.
But it stuck with me—especially now, when clients sit across from me and casually mention that their friend doesn’t disclose their foreign bank account, so why should they?
Here’s the thing: I get it. Your friend probably seems like a perfectly reasonable person. Maybe they’re smart about money. Maybe they have foreign accounts and everything seems... fine. So when they tell you they don’t bother with FBAR filings, it’s natural to think, “Well, they’re doing okay, aren’t they?”
Except one day, the IRS shows up.
And your friend’s “fine” becomes a $250,000 penalty or federal prison time. Suddenly the bridge metaphor doesn’t seem so quaint.
The Horowitz’s and Their Expensive Friend Group
Meet Peter and Susan Horowitz. Completely normal, smart people. They were US citizens living in Saudi Arabia from 1984 to 2001, and like many expats, they opened a Swiss bank account. No drama there—lots of expats do it.
They moved back to the US and never closed the account. By 2008, it had grown to $2 million. Still no immediate problem.
Then things got weird. Peter wanted to open a joint account at a different Swiss bank (Finter), but Susan wasn’t physically present for the opening. So the bank kept the account in Peter’s name. A year later, when Susan finally traveled to Switzerland, her name got added.
Pretty straightforward so far. But here’s where the story turns.
Every year, Peter and Susan filed their tax returns. They used tax summaries from their US tax preparers to prepare their returns. Peter never asked if he needed to disclose the Swiss account. The preparers never mentioned it. Year after year, when Schedule B asked, “Do you have a financial interest in or signature authority over a foreign bank account?”—both of them checked “No.”
The Conversation That Changed Everything
Here’s what the IRS discovered: The Horowitz’s had been chatting with other expatriates about whether they owed US taxes on foreign income. They’d heard from friends that income earned in Saudi Arabia was only taxable in Saudi Arabia. Peter thought he didn’t have FBAR filing requirements. Susan didn’t even know what an FBAR was.
Sound familiar? This is the moment the bridge question becomes relevant.
The court’s response was sharp. The judges basically said: Your friends’ opinions don’t override what Schedule B explicitly asks you to do. And here’s the kicker—the fact that the Horowitz’s were even having these conversations meant they were aware of their compliance obligations. They just chose to have those conversations with friends instead of with tax professionals.
The court called it “willful blindness.”
Not malice. Not intentional fraud. Just... willful blindness. Knowing you have a compliance issue, but deliberately not asking anyone who would actually know the answer.
The result? The IRS assessed willful FBAR penalties against both Peter (for 2007 and 2008) and Susan (for 2007).
Why This Matters in 2025
Let me put some numbers on this.
Willful FBAR penalties in 2025 are the greater of $165,353 or 50% of your account’s highest balance per year, per account. (These amounts are inflation-adjusted annually, so they tend to creep up.)
Think about that second number. If you have $500,000 in foreign accounts and the IRS determines your non-disclosure was willful, you could be looking at a $250,000 penalty for a single year of non-compliance.
And that’s just the financial side. Willful FBAR violations can also result in criminal prosecution—up to 5 years in prison and fines of $250,000.
Now, the penalties for honest mistakes (non-willful violations) are lower—around $16,536 per violation.
But the difference between “honest mistake” and “willful blindness” is often determined by a single question: Did you avoid asking professionals about your obligations?
Because that’s what the Horowitz’s did. They had conversations with friends instead of accountants. They never asked their preparers about FBAR. They signed returns saying they’d reviewed every question, and they checked “No” on the foreign account line.
That’s not a mistake. That’s willful blindness.
The Real Risk
What’s wild is that you don’t need to intend to break the law for this to apply. The courts have expanded the definition of “willfulness” to include:
Knowing about the requirement and ignoring it
Being reckless about learning your obligations
Deliberately avoiding learning about your responsibilities (aka willful blindness)
That third category is where most people end up. You have a foreign account. You earn income from it. You suspect there might be some reporting requirement, but instead of asking a tax pro, you ask your friend. Or you Google it. Or you just... do nothing.
That’s willful blindness.
What You Should Actually Do
If you have foreign bank accounts, the fix is simple (even if it’s not free):
Talk to someone who knows this stuff. An Enrolled Agent. A CPA. A tax attorney who specializes in international taxation. Not your neighbor. Not your friend who’s “pretty good with taxes.” Someone who actually knows FBAR requirements.
If you’ve missed prior years, there are IRS programs to catch up without facing criminal prosecution—but you need to move on it before the IRS comes knocking.
Going forward, make sure your tax preparer is asking about foreign accounts every single year. If they’re not, find someone else. This isn’t a nice-to-have. It’s a “your financial future depends on it.”
The Bridge Question, Revisited
So circle back to that question your parents asked you: “Would you jump off a bridge if your friend did it?”
The answer is still no.
Your friend might not be filing their FBAR. Your friend might get away with it for years. But they might also wake up one day to a letter from the IRS, and suddenly their “everything’s fine” becomes $250,000 in penalties or federal prison time.
The Horowitz’s probably had friends who weren’t disclosing accounts either. Maybe those friends got lucky. Maybe they didn’t. But Peter and Susan didn’t get lucky, and now they’ve got a court judgment and a cautionary tale.
Don’t be the friend in someone else’s story about what not to do.
Citation: Horowitz v. United States, District Court for Maryland, January 18, 2019 (123 AFTR 2d ¶2019-362)