Can an Interested Party Testify about the Meaning of a Foreign Term in a Document Translated from English?
Kurotaki v. United States addressed the limits of a Japanese taxpayer’s testimony about a mistranslation in a Japanese-language tax document, focusing on the distinction between lay testimony and expert testimony and the implications of his status as an interested party in an FBAR willfulness case.
Legal translation services play a key role in litigation. In the complex world of civil tax enforcement, and litigation in general, the interplay between subjective understanding, linguistic nuance, and evidentiary standards can be pivotal. The case of Kurotaki v. United States illustrates this interplay vividly, as a U.S. permanent resident and native Japanese speaker defends himself against allegations of willfully failing to file Foreign Bank Account Reports (FBARs). Central to the dispute is whether the taxpayer—Osamu Kurotaki—can testify as to the meaning of a Japanese term in a tax document, and if so, whether such testimony constitutes permissible lay opinion or impermissible expert analysis. This issue is further complicated by the fact that Kurotaki is not only a witness but also an interested party with millions of dollars in civil penalties on the line.
This article examines the evidentiary framework applied by the court in deciding the admissibility of Kurotaki’s linguistic testimony, the legal standard for expert testimony versus lay witness testimony, and the court’s nuanced handling of testimony offered by an interested party who seeks to explain how an English to Japanese translation led to a misunderstanding of a federal reporting obligation.
FBAR Obligations and Willfulness
The U.S. government brought suit against Kurotaki, alleging he willfully failed to file FBARs from 2011 to 2013 in violation of the Bank Secrecy Act. The penalties assessed were staggering—over $10 million. Kurotaki paid just $9,000, prompting a refund suit and counterclaim by the government to reduce the full penalty to judgment.
The heart of the case is whether Kurotaki’s failure to file was willful. Under existing law, a violation is “willful” if it is knowing, reckless, or the product of willful blindness. Negligence, however, is insufficient. Kurotaki contends he was not willful, relying on a Japanese translation of an English tax questionnaire that incorrectly described FBAR requirements as applying only to “U.S. resident taxpayers.” Kurotaki asserts that, because he lived in Japan, he did not consider himself a U.S. “resident” and thus believed the requirement did not apply to him—even though he held a green card.
The case is before the United States Court for the District of Hawaii, which denied the government’s motion for summary judgment for a judgment assessing the full FBAR penalties. The district court held that there was a genuine issue of material fact as to whether Kurotaki willfully failed to follow the FBAR filing requirement.
The Translation Defense
Kurotaki’s defense hinges on the meaning of a single Japanese word—kyojūsha—used in the tax document translated from English to Japanese. He argues that this term connotes someone who physically resides in a place, not someone who holds legal residency. Had the questionnaire used the word eijūsha, Kurotaki claims, he would have understood it to refer to legal permanent residents like himself, and would have known to file FBARs.
This linguistic nuance is critical because the government seeks to prove willfulness. If Kurotaki genuinely misunderstood the requirement due to a mistranslation, his failure to file could be deemed negligent at worst—not willful. But if the court finds his misunderstanding implausible, or concludes that he ignored obvious red flags, he may be liable for civil penalties that dwarf the original tax exposure.
Expert vs. Lay Testimony
The evidentiary issue arose when Kurotaki sought to testify at trial about the meanings of kyojūsha and eijūsha in Japanese, arguing that his misunderstanding of the terms excused his conduct. The government moved to exclude this testimony, arguing that any interpretation of Japanese linguistic nuances constitutes expert opinion. Under Federal Rule of Evidence 702, expert testimony must be disclosed in advance, accompanied by a report, and must be based on specialized knowledge not commonly possessed by laypersons. Kurotaki had not disclosed himself as an expert under Rule 26(a)(2), nor had he retained a linguistic expert to testify on his behalf.
The court agreed in part. Because Kurotaki did not designate himself or anyone else as an expert or submit a report, he could not now offer expert opinions on Japanese linguistic nuances. Allowing him to do so would prejudice the government, which had no chance to prepare a rebuttal expert, and would disrupt trial scheduling. Under FRCP Rule 37(c)(1), such undisclosed expert testimony is barred unless the failure was substantially justified or harmless. Kurotaki made no attempt to show either, so exclusion was proper—even without bad faith. However, the court distinguished between expert opinion and lay testimony under Rule 701.
Lay Opinion by an Interested Party
Federal Rule of Evidence 701 permits a lay witness to testify to opinions or inferences that are:
1. Rationally based on the witness’s perception,
2. Helpful to clearly understanding the witness’s testimony or determining a fact in issue, and
3. Not based on scientific, technical, or other specialized knowledge.
The court held that Kurotaki could testify as a lay witness about his subjective understanding of the term kyojūsha—how he personally interpreted it at the time he completed the tax questionnaire. This type of testimony, the court explained, was akin to allowing a drug dealer’s associate to testify about code words used in recorded conversations. It is rooted in personal experience and does not require specialized knowledge.
Yet, Kurotaki walks a fine evidentiary line. While he may explain what kyojūsha meant to him, he may not assert what it means generally, provide definitions from dictionaries or grammar guides, or draw comparisons to eijūsha—a term he claims would have alerted him to his FBAR obligation. To do so would veer into expert territory, and the court precluded that testimony.
The Problem of Self-Serving Testimony
The district court’s rulings highlight a critical problem: Kurotaki is not a neutral observer but an interested party with a great deal at stake. This raises legitimate concerns about the credibility and weight of his testimony, especially since no independent expert will testify to corroborate his claimed linguistic misunderstanding.
Courts routinely instruct juries to consider the interest of a witness in the outcome of the case when evaluating credibility. But the situation becomes more complex when the interested party is the only one offering a key piece of interpretive evidence. How much weight should a jury give to Kurotaki’s subjective understanding of a word, particularly when he offers it in isolation and without expert support?
Moreover, allowing a party to offer opinion testimony about the meaning of foreign-language terms—especially ones that are dispositive—risks opening the door to abuse. A taxpayer facing willfulness penalties could simply claim, “I didn’t understand because of the translation,” and support that claim with personal testimony framed as lay opinion. Without limits, this could erode the reliability of the willfulness standard, which rests in part on whether a taxpayer’s conduct was objectively reckless.
Judicial Guardrails: Limiting Misleading Uses of Language
Recognizing the potential for jury confusion, the court imposed significant guardrails on Kurotaki’s testimony. He may not use demonstrative exhibits, written translations, or other visual aids to suggest an authoritative meaning of the disputed terms. Nor may he present testimony from others supporting his interpretation. And while he may testify about his own understanding, he must clarify that he is using the term “resident” in a non-legal, colloquial sense.
The court was especially wary of conflating colloquial and legal meanings of the word “resident.” It permitted Kurotaki to say that he considered himself a resident of Japan in the everyday sense—that he lived there, spent most of his time there, and viewed it as home—but barred him from claiming legal residency under Japanese law. Since Kurotaki offered no expert on Japanese legal residency, and conceded he would not provide such testimony, the court prohibited him from using the term in any way that implied legal status.
Cultural Context and the Use of Seals
A related evidentiary issue concerned Kurotaki’s use of seals in Japanese banking. In Japan, seals (known as hanko or ginko-in) are commonly used to authorize transactions in lieu of signatures. Kurotaki wanted to argue that because he did not physically possess or use the seals connected to certain foreign accounts, he lacked “signature or other authority” under FBAR regulations.
Again, the court permitted only limited testimony. Kurotaki could describe how seals are used in Japanese banking and explain the extent of his personal control (or lack thereof) over those seals. He could argue that he subjectively believed he lacked signature authority, which might negate willfulness. But he could not argue that, as a matter of Japanese law or FBAR regulation, the use of seals categorically precluded signature authority. That would be a legal conclusion—one he was not qualified to give.
Implications for Future FBAR Cases
The court’s approach in Kurotaki highlights the evidentiary tightrope that litigants must walk when offering testimony about foreign language terms or cultural practices. Lay testimony is permitted to explain personal understanding or conduct, but cannot cross into the domain of expert analysis. And when the testimony comes from an interested party, the court is especially vigilant in restricting the scope of permissible inferences.
This ruling reinforces two key principles in FBAR litigation:
1. Subjective misunderstanding is a valid defense to willfulness—but only if credibly presented. Courts will allow taxpayers to testify about their own beliefs and understanding. But such testimony will be scrutinized carefully, especially where it is self-serving and uncorroborated.
2. Expert issues require expert witnesses. If a taxpayer wants to argue that a mistranslation or cultural practice contributed to a misunderstanding of U.S. law, they must comply with expert disclosure rules. Failing to do so will bar the testimony or severely restrict its scope.
The Kurotaki case serves as a cautionary tale on the limits of lay testimony and the challenges of presenting linguistic or cultural defenses in federal civil litigation. The court’s nuanced rulings allow the jury to hear Kurotaki’s personal story while preventing him from masquerading as a linguistic expert. By striking a careful balance, the court preserves both the integrity of the trial process and the fairness of the willfulness inquiry.
As FBAR enforcement continues to be a priority for the IRS, and as more cases involve foreign-language documents and cross-cultural issues, courts will increasingly face the challenge of distinguishing genuine misunderstanding from willful evasion. The evidentiary framework developed in Kurotaki provides a useful roadmap for future litigants—and a reminder that the meaning of a single word can sometimes carry million-dollar consequences.
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Cases Discussed:
Kurotaki v. United States, 132 A.F.T.R.2d 2023-6138, 2023 WL 6604892 (D. Hawaii, Oct. 10, 2023).
Kurotaki v. United States, 134 A.F.T.R.2d 2024-6248, 2024 WL 4905556 (D. Hawaii, Nov. 27, 2024).