Taxpayers with significant FBAR non-willful penalties may breathe a sigh of financial relief if the U.S. Supreme Court decides the FBAR non-willful penalty is per form, not per account.
Yesterday, the U.S. Supreme Court granted certiorari in Bittner, Alexandru v. U.S. (21-1195) on this precise issue. The appellate court held that the FBAR civil non-willful penalty is applied on a per account basis, and not per form, which resulted in significantly higher penalties for Mr. Bittner, as it would for many other taxpayers. United States v. Bittner, 19 F.4th 734 (5th Cir. 11/30/21). Mr. Bittner can thank the Ninth Circuit court for his basis to appeal because of the conflicting decision in United States v. Boyd, 991 F.3d 1077 (2021), in which the case was an issue of first impression for the Ninth Circuit Court of Appeals.
It is undisputed that 31 U.S.C. § 5321 authorizes multiple non-willful penalties for the untimely filing of a single accurate FBAR that includes multiple foreign accounts, but the court in Ms. Boyd’s case disagreed with the government and felt that the statute, read with the regulations, authorizes only a single non-willful penalty for the failure to file a timely FBAR. Ms. Boyd also argued that the rule of lenity applies to statutes imposing penalties, and as a result, the statute should be construed strictly against the government, to which the court agreed.
Stay tuned for an update on the view from the highest court!