The Bank Secrecy Act is designed to combat money laundering and tax evasion by requiring U.S. citizens and residents to file reports disclosing their foreign bank accounts. Non-willful violations of the law are subject to a maximum penalty of $10,000 per violation.
Bittner had only learned of the requirement to file the so-called FBAR reports after returning to the United States from Romania in 2011. He subsequently submitted five annual reports covering the years 2007 to 2011. The issue was whether violations are assessed based on the number of FBAR reports a taxpayer was supposed to file or the number of foreign bank accounts that they were supposed to reveal on those reports.
While the 5th U.S. Circuit Court of Appeals agreed with the government's reading of the law, conservative Justice Neil Gorsuch, writing for Tuesday's majority, said the statute never authorized per-account violations. He stated that "the BSA treats the failure to file a legally compliant report as one violation carrying a maximum penalty of $10,000, not a cascade of such penalties calculated on a per-account basis."
Justice Gorsuch further noted that, in contrast with how Congress authorized per-account penalties for some willful violations, "conspicuously, the one place in the statute where the government needs per-account language to appear is the one place it does not."
Daniel Geyser, Bittner's lawyer at Haynes and Boone, said in a statement that the ruling "correctly cabins the IRS's discretion and curbs agency overreach."
The decision is expected to limit the ability of the IRS to assess penalties, and its implications may be significant for individuals who have been hit with similar penalties in the past.
The case is Bittner v. United States, U.S. Supreme Court, No. 21-1195.