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Is a penalty assessment ripe for judicial review?

The U.S. Tax Court has held that it does not have jurisdiction to review the IRS’s decision to impose an FBAR penalty. In Williams v. Commissioner, upon receipt of a notice of deficiency covering income taxes for years 1993 – 2000, the taxpayer filed a petition seeking, among other things, a redetermination of penalties imposed under 31 U.S.C. § 5321 for failure to file foreign bank account reports (FBARs) to disclose his Swiss bank accounts. The IRS can assess the FBAR penalty and “commence a civil action to recover” it. For certain taxes, the IRS is required to issue a notice of deficiency before making an assessment. Upon receipt of this notice, the filing of a timely petition with the Tax Court triggers the court’s “deficiency” jurisdiction to redetermine the tax shown in the notice. Because the IRS is not required to issue a notice of deficiency before assessing the FBAR penalty, the court reasoned, the FBAR penalty falls outside the court’s deficiency jurisdiction.