The Tax Times: December 2025

The Eleventh Circuit has delivered an important reminder to taxpayers with foreign account reporting problems: you cannot use the U.S. Tax Court’s Collection Due Process procedures to fight FBAR penalties or Social Security offsets collecting those penalties. In Stephen Jenner et al. v. Commissioner of Internal Revenue, No. 25-10014 (11th Cir.), the court affirmed the Tax Court’s dismissal of a CDP petition brought by a Florida couple who tried to challenge the collection of their willful FBAR penalties through Treasury’s offset of their Social Security benefits.

Stephen and Judy Jenner had previously been hit with significant willful FBAR penalties under Title 31 for failing to report foreign accounts. Those penalties were then collected through the Treasury Offset Program, which diverted a portion of their monthly Social Security benefits. Treating this like any other IRS collection action, the Jenners submitted paperwork seeking a Collection Due Process (CDP) hearing and then petitioned the Tax Court when they did not receive the relief they wanted. Their theory was straightforward: if the government is taking their benefits to collect a federal liability, they should get the same CDP protections available for federal tax debts.

Both the Tax Court and the Eleventh Circuit rejected that position. The key distinction is that FBAR penalties are imposed under Title 31 of the U.S. Code, not the Internal Revenue Code. CDP jurisdiction under sections 6320 and 6330 applies only to “unpaid tax” and related additions and assessable penalties under Title 26. In other words, the CDP regime is a tax mechanism, not a universal shield against every kind of federal debt collection. Because the Jenners’ liability was a Title 31 FBAR penalty, there was no qualifying CDP “determination” and the Tax Court had no jurisdiction to review their case.

For taxpayers and practitioners, the message is clear:

Tax Court Is Not A Viable Forum To Litigate FBAR Penalty Collections, Even When The Government Uses Familiar Tools Like Offsets Against Social Security Benefits.

Challenges to FBAR assessments and collection must instead proceed through other avenues, such as refund litigation in federal district court or the Court of Federal Claims, or by defending against government-initiated suits to reduce penalties to judgment. Advisors representing clients with FBAR exposure should plan strategy with this jurisdictional line firmly in mind and avoid giving clients false comfort that a CDP petition will stop or undo FBAR-driven offsets.

This decision also underscores the growing structural divide between traditional tax controversies and the parallel world of Bank Secrecy Act enforcement. While IRS employees play a central role in FBAR examinations and assessments, the remedies, procedures, and forums are not interchangeable with those that apply to income tax, employment tax, or other Title 26 liabilities.

For high-net-worth individuals and cross‑border clients, that means any FBAR problem needs litigation and settlement strategy from day one and one that accounts for the limited role of the Tax Court and the real risk that collection can proceed through administrative offsets with fewer procedural guardrails than many taxpayers expect.