$1.68 million FBAR default judgment against Florida tax preparer

United States v. Mehta

On October 10, 2025, the U.S. District Court for the Middle District of Florida granted the United States’ motion for default judgment in United States v. Mehta, No. 8:25-cv-483-VMC-AEP.

The court entered judgment against Chandrakant P. Mehta for willful FBAR violations for 2016 and 2017.

Total as of August 12, 2025: $1,683,636.01, plus accruing statutory additions.

Why It Matters

The decision enforces timely assessed FBAR penalties and shows how failure to appear can result in default judgment that reduces assessments to a federal judgment for collection.

Key Facts

• Parties: United States (plaintiff) v. Chandrakant P. Mehta (defendant).

• Court/Judge: U.S. District Court, M.D. Fla., Tampa Division; Judge Virginia M. Hernandez Covington.

• Issue: Willful failure to file FBARs reporting foreign financial accounts for 2016 and 2017.

• Statutes/Regs: 31 U.S.C. §§ 5314, 5321(a)(5), 5321(b); 31 C.F.R. §§ 1010.306(c), 1010.350(a), 1010.350(b)(1), 1010.810(g); 31 C.F.R. § 5.5(a); 31 C.F.R. § 1010.821; 31 U.S.C. § 3717.

• Return linkage: Form 1040 Schedule B foreign-account questions; FBAR (FinCEN Form 114) due by April 15 with automatic extension under Pub. L. No. 114-41, § 2006(b)(11).

• Accounts: ICICI Bank Limited (India) and Karur Vysya Bank (India).

• Example peak balances: Karur Vysya acct …0182 (2016) $1,450,000; ICICI acct …4351 (2016) $3,379,966; multiple ICICI accounts with six-figure balances in 2017.

• Assessments: Willful FBAR penalties assessed March 7, 2023; notice and demand sent March 31, 2023.

• Service/Default: Personally served June 14, 2025; answer due July 7, 2025; default entered July 9, 2025.

• Relief: Default judgment for unpaid FBAR penalties plus interest and late-payment penalties.

Timeline

May 11, 2011–June 2017: Multiple ICICI Bank accounts opened; Mehta identified as main holder.

Sept. 21, 2016: Karur Vysya Bank account …0182 opened in Mehta’s name.

Apr. 18, 2017: 2016: FBAR due.

Apr. 17, 2018: 2017 FBAR due.

Feb. 16, 2023: IRS Letter 3709 proposes willful FBAR penalties.

Mar. 7, 2023: IRS assesses willful FBAR penalties.

Mar. 31, 2023: IRS Letter 3708 provides notice and demand.

Feb. 28, 2025: United States files complaint.

Jun. 14, 2025: Personal service of complaint and summons.

Jul. 9, 2025: Clerk enters default.

Aug. 7, 2025: United States moves for default judgment.

Oct. 10, 2025: Court grants default judgment and closes case.

Court Findings

• Mehta was a U.S. citizen and thus a “United States person” required to file FBARs for 2016 and 2017.

• He had a financial interest in, and signatory authority over, accounts at ICICI Bank Limited and Karur Vysya Bank during 2016–2017.

• The maximum aggregate balance in foreign accounts exceeded $10,000 in each year.

• He failed to file FBARs for 2016 and 2017.

• Conduct supporting willfulness included knowledge of FBAR requirements, experience preparing U.S. tax returns, false nonreporting, instructing a bank not to mail to a local address, and adding family nominees while retaining control.

• The IRS timely assessed penalties within the six-year assessment period and filed suit within two years of assessment.

• Mehta failed to appear, plead, or otherwise defend; default was properly entered.

• The pleadings and supporting declaration provided a sufficient basis for judgment under Rule 55.

Judgment Details

• Principal FBAR penalties: $1,444,347.

• Prejudgment interest: $34,229.05 under 31 U.S.C. § 3717(a)(10) and 87 FR 70888-02.

• Late-payment penalties: $205,374.28 under 31 U.S.C. § 3717(e)(2) and 31 C.F.R. § 5.5(a).

• Credit applied: $314.32 against late-payment penalty.

• Total as of Aug. 12, 2025: $1,683,636.01, plus interest and further additions under 31 U.S.C. § 3717(e)(2) and as otherwise provided by law.

• Clerk directives: Enter judgment for the United States and close the case.

Outcome

The court granted the United States’ motion for default judgment and entered judgment against Mehta for $1,683,636.01 plus accruing statutory additions. The case was closed on October 10, 2025.

The Takeaway

FBAR assessments backed by timely procedures can be converted to a federal judgment when a defendant does not respond. Default judgment allows the government to collect assessed penalties and statutory additions for willful nonfiling.

United States v. Mehta, No. 8:25-cv-483-VMC-AEP (M.D. Fla. Oct. 10, 2025)

Source: Justia

Court Opinions Cited

1. United States v. Schwarzbaum, 24 F.4th 1355 (11th Cir. 2022)
   – Cited for authority on FBAR penalty framework under 31 U.S.C. § 5321(a)(5).

2. United States v. Clines, 958 F.2d 578 (4th Cir. 1992)
   – Explains rationale and process behind foreign-account reporting.

3. DirecTV, Inc. v. Griffin, 290 F. Supp. 2d 1340 (M.D. Fla. 2003)
   – Cited for default-judgment standard under Fed. R. Civ. P. 55(b)(2).

4. Cotton v. Massachusetts Mutual Life Insurance Co., 402 F.3d 1267 (11th Cir. 2005)
   – Establishes that a defaulting defendant admits well-pleaded facts.

5. Surtain v. Hamlin Terrace Foundation, 789 F.3d 1239 (11th Cir. 2015)
   – Confirms court must ensure a sufficient basis in pleadings before entering default judgment.

6. Tyco Fire & Security, LLC v. Alcocer, 218 F. App’x 860 (11th Cir. 2007)
   – Reinforces the need for a substantive basis in pleadings before default judgment.

7. United States v. Kahn, 164 F. App’x 855 (11th Cir. 2006)
   – Cited for authority that default is appropriate when a party fails to defend.

8. United States v. Rum, 995 F.3d 882 (11th Cir. 2021)
   – Defines “willfulness” in the FBAR context as an objective standard.

9. United States v. Kronowitz, No. 19-cv-62648, 2021 U.S. Dist. LEXIS 104157, 2021 WL 2251954 (S.D. Fla. June 3, 2021)
   – Cited for examples of indicia of willfulness in FBAR cases.

10. United States v. Mehta (“Mehta I”), No. 8:18-mc-00088-TPB-SPF (M.D. Fla.)
    – Referenced for Mehta’s prior testimony about preparing tax returns and knowledge of FBAR requirements.

Statutes and Regulations Cited

• 31 U.S.C. § 5314 – FBAR filing requirement.

• 31 U.S.C. § 5321(a)(5) – Authorizes civil FBAR penalties.

• 31 U.S.C. § 5321(b)(1)-(2) – Statute of limitations on assessment and collection.

• 31 U.S.C. § 3717(a)(10), (e)(2) – Interest and late-payment penalties on debts owed to the United States.

• 26 U.S.C. § 61(a) – Definition of gross income; worldwide income.

• 31 C.F.R. § 1010.306(c) – Timing of FBAR filing.

• 31 C.F.R. § 1010.350(a), (b)(1) – Who must file an FBAR.

• 31 C.F.R. § 1010.810(g) – Delegation to IRS for FBAR enforcement.

• 31 C.F.R. § 5.5(a) – Late-payment penalty rate.

• 31 C.F.R. § 1010.821 (Table 1) – Inflation-adjusted FBAR penalty limits.

• 26 C.F.R. § 1.1-1(b) – Citizens/residents taxed on worldwide income.

• Fed. R. Civ. P. 55(a)-(b)(2) – Default and default-judgment procedures.

Other Authorities

• Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Pub. L. No. 114-41, § 2006(b)(11), 129 Stat. 443 (July 31, 2015).
  – Set FBAR due date to April 15 with automatic extension.

• IRS Internal Revenue Manual § 4.26.17.5.5.1(2)
  – Defines “date of the transaction” for FBAR-violation statute of limitations.

• 87 Fed. Reg. 70888-02 (2022)
  – Specifies 1% annual interest rate for debts owed to the U.S. under § 3717(a)(10).