Same Statute, Same Form, Different Penalties: Welcome To FBAR Litigation

Published date11 January 2022
Subject MatterTax, Income Tax, Tax Authorities
Law FirmHolland & Knight
AuthorJames Dawson, Chad Vanderhoef and Alexander R. Olama


  • In United States v. Boyd, 991 F.3d 1077 (9th Cir 2021), the U.S. Court of Appeals for the Ninth Circuit held that the non-willful penalty as to the "Report of Foreign Bank and Financial Accounts" (FBAR) applies on a per form basis and not on the number of foreign accounts a person controls.
  • Eight months later, on Nov. 30, 2021, the Fifth Circuit in United States v. Bittner, 19 F.4th 734 (5th Cir 2021) held that the non-willful FBAR penalty applies per account rather than per form.
  • This Holland & Knight alert explores these decisions and how interpreting the clear language of the statute can lead to divergent conclusions.

The "Report of Foreign Bank and Financial Accounts" (FBAR) penalty has been the subject of much litigation. This Holland & Knight alert focuses on the non-willfulness element of 31 U.S.C. ' 5321(a)(5)(B). Both the U.S. Court of Appeals for the Ninth Circuit and the Fifth Circuit claim the statutory language provides for one result and yet they reached opposite conclusions. Why?

United States v. Boyd: The Facts

Ms. Boyd had a financial interest in multiple financial accounts in the United Kingdom. She received interest and dividends from these accounts, but she did not report such income on her 2010 federal income tax return or disclose the accounts to the Internal Revenue Service (IRS). In 2012, Ms. Boyd participated in the IRS Offshore Voluntary Disclosure Program and submitted an FBAR listing her 14 foreign accounts for 2010. Further, Ms. Boyd amended that year's tax return to include the interest and dividends from those accounts. Ms. Boyd later opted out of the program and the IRS examined her income tax return. The IRS concluded that Ms. Boyd had committed 13 non-willful violations of the FBAR reporting requirements under 31 U.S.C. ' 5314 ' one for each account she failed to timely report for 2010. The United States then sued Ms. Boyd to collect civil penalties under 31 U.S.C. ' 5321(a)(5)(A).

Ms. Boyd argued that she had committed only one non-willful violation, not 13, for failure to file an accurate form, and that the maximum penalty allowed by the statute for that single non-willful violation was $10,000. The District Court agreed with the government. The Ninth Circuit agreed with Ms. Boyd.

United States v. Bittner: The Facts

Alexandru Bittner was born and raised in Romania. He emigrated to the United States in 1982 and became a naturalized U.S. citizen in 1987. In 1990, Mr. Bittner returned to Romania and became a successful businessman. He earned millions of dollars and maintained foreign bank accounts across Europe. Mr. Bittner was unaware that as a U.S. citizen, despite living in Romania, he was required to disclose his foreign accounts to the U.S. government. He returned to the United States in 2011 and, upon learning of his reporting obligations, hired a CPA to file his outstanding FBARs. The delinquent FBARs were insufficient in that not all accounts were reported. In 2013, Mr. Bittner filed corrected FBARs...

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