The U.S. Supreme Court Agreed with Precedent Set by Taylor Nelson Amitrano LLP and Determined The Maximum Non-Willful Penalty For A Late-Filed FBAR Is $10,000

March 2, 2023

Taylor Nelson Amitrano LLP, a prominent tax controversy firm located in Santa Ana, CA, is pleased to announce that the U.S. Supreme Court, in the case of Bittner v. U.S., resolved a circuit split and agreed with the precedent set by Taylor Nelson Amitrano LLP, in its 9th Circuit Court victory in the matter of U.S. v. Boyd. In doing so the U.S. Supreme Court made clear that the maximum penalty for failing to timely file an FBAR is $10,000 per year if the failure to file is not willful.

The 9th Circuit case handled by Taylor Nelson Amitrano LLP, United States v. Boyd, involved the question of whether the IRS can penalize a taxpayer who non-willfully files a late Foreign Bank Account Report (“FBAR”) up to $10,000 for each foreign account listed on the late-filed FBAR (“$10,000 per account”), or instead can only impose a single penalty of up to $10,000 (“$10,000 per FBAR”), even where the FBAR reports multiple foreign accounts.

In an opinion issued on March 24, 2021, The Ninth Circuit reversed the holding of the District Court and held that the IRS may only impose a penalty of up to $10,000 per FBAR, regardless of the number of accounts shown on the late-filed FBAR, where a taxpayer non-willfully files a late, but accurate, FBAR. The opinion in Boyd characterized the government’s position that it can impose a “per account” penalty of up to $10,000 where the taxpayer non-willfully files a late, but accurate FBAR as not a reasonable position.

At the time that Boyd was decided, no other Circuit Court had ruled on the issue of whether the IRS could assess a taxpayer who non-willfully failed to timely file an FBAR $10,000 for each individual account that was not reported, or whether a maximum penalty of $10,000 per Form applied. On November 30, 2021, the 5th Circuit Court of Appeals held that a taxpayer who non-willfully files a late FBAR can be penalized $10,000 for each foreign account listed on the late-filed FBAR. Because of the Circuit split between the 5th Circuit and 9th Circuit Court of Appeals, Bittner appealed to the U.S. Supreme Court who granted certiorari.

On February 28, 2023, the U.S. Supreme Court sided with Bittner in holding that a taxpayer can only be assessed with a single $10,000 penalty for non-willful failure to timely file an FBAR. The decision provides protection to U.S. taxpayers who often are unaware of their legal requirement to file FBARs. In ruling in favor of Bittner, the U.S. Supreme Court referenced the 9th Circuit Court of Appeal decision in Boyd.

U.S. citizens and residents who have foreign bank accounts and who have certain other types of foreign accounts are required to file an FBAR for any year where the value of these foreign accounts exceeds $10,000 during that year. A failure to a timely, complete and accurate FBAR can result in serious financial penalties, as well as a criminal prosecution, if the IRS concludes that such a failure was “willful.” If the IRS is seeking to penalize you for a lack of compliance with the rules governing the filing of FBARs, or if you have any questions about these rules, Taylor Nelson Amitrano LLP stands ready to assist you.