US v. Bittner (DC TX 6/29/2020), that the penalty for a non-willful FBAR violation relates to each FBAR form not timely or properly filed rather than to each foreign financial account maintained but not timely or properly reported.
Under 31 USC § 5314(a), every U.S. person that has a financial interest in, or signature or other authority over, a financial account, or accounts, in a foreign country must report the account, or accounts, to IRS annually on a FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year and one FBAR is used to report multiple accounts.
31 USC § 5314(a). The maximum amount of the penalty depends on whether the violation was non-willful or willful. The maximum penalty amount for a non-willful violation of the FBAR requirements is $10,000. (31 USC § 5321(a)(5)(B)(i))
The amount determined under 31 USC § 5321(a)(5)(C) is:
(i) in the case of a violation involving a transaction, the amount of the transaction, or
(ii) in the case of a violation involving a failure to report the existence of an account or any
identifying information required to be provided with respect to an account, the balance in
the account at the time of the violation. (31 USC § 5321(a)(5)(D)).
The district court looked to the language of the willful penalty and found that 31 USC § 5321(a)(5)(D) mentions "account" three times. The court said, "Congress clearly knew how to make FBAR penalties account specific."
The court said since "account" is not mentioned in 31 USC § 5321(a)(5)(B)(i), the non-willful penalty only applies to the violation of the FBAR rules. The FBAR rules only talk about filing a return. Thus, the non-willful penalty only applies to the return, not to the number of accounts not mentioned on the return.
The district court recognized that Boyd came to an opposite conclusion. But the court found that the Boyd court's analysis fails to provide adequate guidance as to how it reached the conclusion it did. The district court also said that Boyd is in a different district in a different circuit.
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