Bittner v. United States

Records and reports on foreign financial agency transactions as detailed in 31 U.S.C. §5314 and §5321 may penalize nonwillful violations up to $10,000 per inadequate report, not per foreign account that is in violation.

Alexandru Bittner, a dual U.S., and Romanian citizen, was penalized for failing to file Reports of Foreign Bank and Financial Accounts (FBAR) for a total of 272 accounts. The government argued that because the penalty for nonwillful reporting failure applied to each account, the penalty due was $2.72 million. Bittner argued that the BSA only authorized a maximum penalty for nonwillful violations of $10,000 per report, not per account. The Fifth Circuit upheld the government’s assertion that the penalty was due for each account in error. The Banking Secrecy Act (BSA) imposes a $10,000 fine for nonwillful failure to file FBAR for foreign accounts in a timely or accurate manner. 31 U.S.C. §5314, 31 C.F.R. §1010.306. The Court held that because statutory language between willful and nonwillful violations was different, individuals with more than 25 foreign accounts did not need to detail accounts in their report. The Court found that the per-account method could penalize nonwillful violators more harshly than willful violators, and the rule of lenity imposes penalties in favor of individuals over the government, the penalty for FBAR violations is $10,000 per report, not account. Bittner therefore should not have been penalized for each individual foreign account. REVERSED AND REMANDED.