On November 2 the Supreme Court held oral arguments in Bittner, on whether the failure to timely file a Financial Crimes Enforcement Network Forms 114, “Report of Foreign Bank and Financial Accounts” (FBAR) constitutes one violation of the Bank Secrecy Act, or one violation for each account properly reportable on the delinquent FBAR. In 2020 a U.S. district court imposed a $10,000 penalty against Alexandru Bittner under 31 U.S.C. section 5321(a)(5)(A) for each of five FBARs not timely filed by him — for a total penalty of $50,000. In 2021 the Fifth Circuit partially reversed, imposing a $10,000 penalty against Bittner for each of the 272 foreign financial accounts reportable on his untimely FBARs — a total penalty of $2.72 million.
Petitioner’s Oral Argument
At oral argument, counsel for Bittner failed to mention that the case was not within the intendment of Congress in instituting the FBAR filing requirement. Congress instituted the FBAR filing requirement to deter Americans from evading U.S. income tax by transferring financial assets overseas, investing them there, and failing to report the income on a U.S. income tax return. But that is not what Bittner did. A naturalized citizen of the United States, Bittner returned to his native Romania where he engaged in business and amassed a fortune before moving back to the United States. Bittner’s Romanian accountants filed U.S. income tax returns for him, but apparently they were unaware of the FBAR filing requirement. In any event, Bittner did not transfer financial assets overseas. A fortiori, he did not do so for the purpose of evading U.S. income tax. . . . [Click here for the full Tax Notes article].
United States v. Bittner, 19 F.4th 734 (5th Cir. 2021), cert. granted, 142 S. Ct. 2833 (U.S. June 21, 2022) (No. 21-1195).
United States v. Bittner, No. 4:19-cv-00415 (E.D. Texas 2020).
California Bankers Ass’n v. Shultz, 416 U.S. 21, 28, 94 S.Ct. 1494, 39 L.ED.2d 812 (1974), quoting H.R. Rep. No. 91-975, at 12-13, 1970 U.S.C.C.A.N. 4395, 4397 (1970). Congress was concerned about the “serious and widespread use of foreign financial facilities” to evade U.S. income tax. H.R. Rep. No. 91-975, 1970 U.S.C.C.A.N. at 4397. See United States v. Bittner, 19 F.4th 734, 738 (5th Cir.), cert. granted, 142 S.Ct. 2833 (U.S. June 21, 2022) (No. 21-1195).