FBAR Questioned in Supreme Court Clash

US Supreme Court [Bittner v. United States, 21-1195].

Justices voiced concern over the Federal Government’s imposed exorbitant penalties on unwitting taxpayers who fail to report and disclose their foreign bank accounts.

• Facts of the Case: Alexandru Bittner is a dual Romanian-US citizen. However, FACTA and FBAR regulations required him to report all his foreign bank accounts annually, which he failed to do on time.
• The Appeal: Bittner is appealing a penalty of $2.72 million assessed under the Bank Secrecy Act after failing to report foreign bank accounts he held during his residence in Romania.
• The Law: The FBAR regulations apply to US citizens and residents. It imposes a maximum penalty of $10,000 for unintentional violations.
• The IRS argument:  According to the IRS version, Bittner violated the law 272 times. Therefore, they argue that he is guilty of one count for each foreign account not reported for each of the five years in question. In addition, the IRS insisted that every account held by a US taxpayer on foreign soil self-evidently concerned the US.
• Bittner’s defense:  Bittner’s version is that he violated the law only five times, once for each annual report he did not file. Therefore, Bittner argued that the maximum penalty is $50,000.

The Justices tested the Biden Administration’s interpretation of the law grounded in the belief that severe penalties deter money laundering and tax evasion.