Victor Jaramillo Weighs in on Supreme Court Decision on Non-Willful FBAR Violators in Tax Notes

Succinctly analyzing the statutory language of the Bank Secrecy Act (BSA) and supporting government guidance, a closely divided Supreme Court delivered a momentous taxpayer victory by finding that non-willful foreign bank account reporting penalties apply per form.

The Court released its 5-4 decision in Bittner v. United States on February 28. Justice Neil M. Gorsuch authored the opinion holding that the BSA's penalty for non-willful FBAR violations applies per report. The holding could mean a difference of millions of dollars in penalties for some taxpayers.

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The dissent also found it significant that the BSA regs differentiated between the form used to report accounts and the reports themselves, saying this shows that the forms are only the “procedural mechanism used to implement the duty to report each foreign account.” The dissent rejected the majority’s interpretation that the statute is binary — i.e., either one files a report or does not.

“The Court’s core error is to conflate the reports referred to in section 5314 with the annual FBAR form. To reiterate, the two are distinct,” the dissent says.

Disagreeing with Barrett’s dissent, Victor A. Jaramillo of Caplin & Drysdale pointed out that the language of the FBAR form is titled a “report.”

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