Supreme Court Determination regarding FBAR Penalty
In a 5-4 decision, the United States Supreme Court held that the $10,000 penalty for nonwillful failure to file a Report of Foreign Bank and Financial Accounts (FBAR) for foreign accounts accrues per report, not per account. (Bittner, No. 21-1195 (U.S. 2/28/23)).
The Supreme Court’s ruling resolves a split between the Fifth and Ninth Circuits, concluding that the Bank Secrecy Act “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.”
The Court pointed out that 31 U.S.C. Section 5314, which highlights an individual’s legal duties under the Bank Secrecy Act, does not speak of accounts, but instead a legal duty to “file reports” and noted the difference in how the statute describes the application of the FBAR penalties to willful violations compared to nonwillful ones.
Please contact your trusted advisor at Reese Henry & Company if you have any questions about this new ruling.