Bittner v. United States
Case Overview
The Supreme Court resolved a significant penalty question under the Bank Secrecy Act's foreign financial account reporting requirements, determining whether the Treasury Department's non-willful FBAR penalty capped at $10,000 per violation applies per unreported account per year or per annual report, a distinction that could mean the difference between a $50,000 penalty and a $2.72 million penalty for the same underlying failure to report.
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The Facts
Alexandru Bittner, a dual U.S.-Romanian citizen, maintained numerous foreign bank accounts for over a decade and failed to file annual Foreign Bank Account Reports as required by the Bank Secrecy Act. The Treasury Department assessed non-willful FBAR penalties of $2.72 million, treating each unreported account in each year as a separate violation. Bittner argued the statute permits only one $10,000 penalty per late or unfiled annual report (a maximum of $50,000 total) rather than a per-account assessment. Two circuits disagreed on the question.
The Application
Applying the rule of lenity to the ambiguous statutory term "violations," the Court found that Bittner's failure to file his annual Foreign Bank Account Reports constituted violations measured by reporting period, not by each unreported account. Although Bittner maintained multiple foreign accounts over many years and the government's position that each unreported account in each year was a separate violation could have resulted in $2.72 million in penalties, the narrow construction required for penal statutes and the rule of lenity necessitated treating each annual filing requirement as generating a single maximum $10,000 penalty per year. The Court concluded that the statute's text, which refers to violations of the reporting requirement as a unified obligation, supported this per-report interpretation rather than an account-by-account assessment. The result was that Bittner's total liability capped at $50,000 despite his decade-long pattern of non-compliance involving dozens of unreported accounts.
The Conclusion
**Decided February 28, 2023. The Court held 5-4 that non-willful FBAR penalties are limited to one $10,000 penalty per annual report, not per account.** Justice Gorsuch wrote for the majority, applying the rule of lenity and the statute's text. Bittner's total penalty was reduced from $2.72 million to $50,000. The ruling significantly limited the government's FBAR enforcement arsenal against non-willful violators with many foreign accounts.
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