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Fifth Circuit Holds that Non-willful FBAR Penalties Apply on Per-Account Basis

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Blog

Fifth Circuit Holds that Non-willful FBAR Penalties Apply on Per-Account Basis

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1 Min Read

Authors

Karl KurzatkowskiJames N. MastracchioSusan Elizabeth Seabrook

Related Locations

Washington, DC

Related Topics

Fifth Circuit
FBAR

Related Capabilities

Tax

Related Regions

North America

December 3, 2021

On November 30, 2021, the Fifth Circuit Court of Appeals in U.S. v. Bittner, __ F.4th __ (5th Cir. Nov. 30, 2021), held that penalties for non-willful failures to report foreign bank accounts apply to each unreported bank account as opposed to each report not filed, as held by other courts.  

The decision creates a split from the Ninth Circuit’s March 2021 ruling, see United States v. Boyd, 991 F.3d 1077 (9th Cir. 2021), and other federal district court rulings applying non-willful FBAR penalties to each failure to file an annual FBAR. The decision presents a Circuit Court split that could potentially attract U.S. Supreme Court attention.

The Bittner decision revolves around a Romanian businessman’s failure to report his interests in foreign bank accounts, as required by the Bank Secrecy Act. The U.S. District Court for the Eastern District of Texas assessed penalties in the amount of $50,000 on a per report basis. The Fifth Circuit, however, concluded that the District Court wrongly applied 31 U.S.C. § 5314 and found that a violation is triggered for each failure to report an account—thereby resulting in the steeper penalty of $2.72 million.

Related Professionals

Related Professionals

Karl Kurzatkowski

James N. Mastracchio

Susan Elizabeth Seabrook

Karl Kurzatkowski

James N. Mastracchio

Susan Elizabeth Seabrook

This entry has been created for information and planning purposes. It is not intended to be, nor should it be substituted for, legal advice, which turns on specific facts.

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