Bittner v. U.S.: A Landmark Supreme Court Ruling on Non-Willful FBAR Penalties

Case Overview: In the landmark case of Bittner v. U.S., the Supreme Court addressed the calculation of non-willful penalties under the Bank Secrecy Act for failures to report foreign bank accounts on the FBAR. This case highlights the significance of accurately understanding and applying non-willful penalties in the context of FBAR violations.

Background

Alexandru Bittner, a dual U.S.-Romanian citizen, failed to report numerous foreign accounts on his FBARs over a series of years. The IRS assessed over $2.7 million in penalties for non-willful violations, calculating penalties based on the number of unreported accounts per year. Bittner challenged the assessment, arguing that penalties should be assessed per form, not per account.

Key Legal Issues

The case centered around the interpretation of "non-willful" violations under the Bank Secrecy Act and the appropriate calculation of penalties. The core legal question was whether the penalties for non-willful FBAR violations should be applied on a per-account or per-form basis.

Ruling and Implications

The Supreme Court ruled in favor of Bittner, deciding that non-willful penalties should be calculated on a per-form basis, significantly reducing potential penalties for individuals with multiple unreported accounts. This ruling has profound implications for U.S. taxpayers with foreign accounts, potentially lowering the financial consequences of non-willful FBAR violations.

Lessons Learned

This case underscores the importance of understanding FBAR requirements and the distinction between willful and non-willful violations. Taxpayers should ensure complete compliance with FBAR reporting to avoid penalties and consider the implications of the Bittner ruling when addressing past non-compliance.

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Note: This content is for informational purposes only and should not be construed as legal advice.