The debate over FBAR penalties for non-willful failure to disclose all of an individual\u2019s or business\u2019 foreign bank accounts has reached the Supreme Court. <\/p>\n\n\n\n
The issue is\nwhether the maximum $10,000 Foreign Bank Account Reporting (FBAR) penalty should\napply on a per-account basis, or rather than in one unified annual basis.<\/p>\n\n\n\n
The Fifth and\nthe Ninth Circuit Appellate Courts have produced inconsistent rulings that\ncould mean the difference between a multi-million dollar penalty and one in the\nthousands.<\/p>\n\n\n\n
In its legal brief, the Justice Department agreed with a\ntaxpayer that the Supreme Court should review a ruling from the US Court of\nAppeals for the Fifth Circuit. The taxpayer, Alexandru Bittner, argued that his\nnon-willful failures to report foreign bank accounts should have been assessed\nwith penalties for each year of non-reporting, not for each account.<\/p>\n\n\n\n
The Fifth Circuit\u2019s November decision contrasted with a\nMarch 2021 Ninth Circuit ruling that the penalty applies once per year.\nDivision between appeals courts is one factor that could attract Supreme Court\ninterest in the case.<\/p>\n\n\n\n
The Justice Department wrote approvingly of the Fifth\nCircuit\u2019s decision, but said the Ninth Circuit\u2019s ruling \u201cthreatens to\nsignificantly weaken the deterrent effect of the penalty provisions within the\nNinth Circuit.\u201d<\/p>\n\n\n\n
\u201cThe question presented is important and will often recur,\nand this case would be an appropriate vehicle in which to address it,\u201d the\ndepartment said.<\/p>\n\n\n\n
The Fifth Circuit\u2019s ruling in Bittner\u2019s case reversed a lower\ncourt\u2019s conclusion on how the non-willful penalty applies, increasing Bittner\u2019s\npenalties to $2.72 million from $50,000.<\/p>\n\n\n\n
Before the Fifth Circuit\u2019s ruling, the non-willful penalty issue had proved to be an exception to the government\u2019s broad winning streak over legal questions tied to the reporting penalties. It has won multiple times, for example, in pushing for a relatively broad definition of \u201cwillful\u201d reporting violations, which can trigger penalties of up to 50% of foreign account assets for each year of non-reporting.<\/p>\n\n\n\n
In his petition to the Supreme Court, Bittner said\nnon-willful penalties arise \u201call the time\u201d and, if the appeals court division\nstays in place, taxpayers will face different penalties for the same conduct in\ndifferent parts of the country.<\/p>\n\n\n\n
It is hoped that the Supreme Court rules in favor of a per filing and not per account basis.<\/p>\n","protected":false},"excerpt":{"rendered":"
The debate over FBAR penalties for non-willful failure to disclose all of an individual\u2019s or business\u2019 foreign bank accounts has reached the Supreme Court. The issue is whether the maximum $10,000 Foreign Bank Account Reporting (FBAR) penalty should apply on a per-account basis, or rather than in one unified annual basis. The Fifth and the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"1","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4246","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=4246"}],"version-history":[{"count":1,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4246\/revisions"}],"predecessor-version":[{"id":4250,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4246\/revisions\/4250"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=4246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=4246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=4246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}