If you are a U.S. person with money in foreign accounts and you missed the FBAR filing requirement without meaning to, this is the most important case in the country for you. Before Bittner, the government took the position that every unreported account was its own violation. Have 50 accounts? That is 50 penalties a year. The Supreme Court shut that down.
The Facts
Alexandru Bittner is a dual citizen of Romania and the United States. He spent years living in Romania. Shortly after he returned to the United States in 2011, he learned about his reporting obligations under the Bank Secrecy Act and hired an accountant to prepare the required reports for five years, 2007 through 2011.
The government found a problem with those late-filed reports. They gave details about his largest account but did not address 25 or more other accounts over which he had signatory authority or a qualifying interest. Mr. Bittner hired a new accountant and filed corrected FBARs. Under the regulations, a filer with 25 or more accounts can simply check a box and report the total number. Mr. Bittner went further and listed every account: 61 in 2007, 51 in 2008, 53 in 2009 and 2010, and 54 in 2011.
The government did not contest the accuracy of the corrected filings. It did not suggest that his earlier errors were willful. But it took the view that nonwillful penalties apply to each account not accurately or timely reported. Five reports, 272 accounts, $10,000 apiece: the government calculated a penalty of $2.72 million.
Mr. Bittner argued that the law allowed at most $10,000 per report. As the Court put it, in his view a failure to file five reports on time "might invite a penalty of $50,000, but it cannot support a penalty running into the millions." The district court agreed with him. The Fifth Circuit disagreed and upheld the government's assessment. The Ninth Circuit had gone the other way in another case, so the Supreme Court stepped in.
The Issue
The Court framed it plainly: "Does the BSA's $10,000 penalty for nonwillful violations accrue on a per-report or a per-account basis?"
The Holding
Per report. The syllabus states the holding: "The BSA's $10,000 maximum penalty for the nonwillful failure to file a compliant report accrues on a per-report, not a per-account, basis." The Fifth Circuit's judgment was reversed.
The vote was 5 to 4. Justice Gorsuch wrote the opinion of the Court, joined in full by Justice Jackson and, except for one part, by Chief Justice Roberts and Justices Alito and Kavanaugh. Justice Barrett dissented, joined by Justices Thomas, Sotomayor and Kagan.
The Reasoning
What the statute actually says
The duty comes from 31 U.S.C. § 5314, which requires reports "in the way and to the extent the Secretary prescribes." The penalty comes from 31 U.S.C. § 5321(a)(5). Subparagraph (B)(i) says the penalty for a violation "shall not exceed $10,000." It says nothing about accounts.
The Court read the obligation as binary. Either you file a compliant report or you do not. A late or deficient report is one violation, not dozens.
Congress knew how to say "per account"
This was the heart of the opinion. In the very same statute, Congress tied two other provisions to individual accounts. The willful penalty in § 5321(a)(5)(C) and (D) is measured by "the balance in the account at the time of the violation." And the reasonable cause exception in § 5321(a)(5)(B)(ii) applies only if "the balance in the account at the time of the transaction was properly reported." The Court reasoned that "when Congress wished to tie sanctions to account-level information, it knew exactly how to do so." It did not do so for nonwillful penalties.
The government's own guidance
The Court also noted that a number of the government's own public guidance documents had seemingly warned of per-report, not per-account, penalties for nonwillful violations. When the government's lawyers and its own public materials point in different directions, that is a problem for the government, and the rule of lenity pointed the same way.
The odd results of the government's theory
The Court walked through anomalies. A person who willfully hides a large balance in one account faces a capped penalty tied to that account, while a person who makes an innocent mistake across many small accounts could face multiples of that amount. Justice Gorsuch wrote that reading the law per report "invites none of these curiosities; the government's per-account theory invites them all."
The criminal side of the same statute
The opinion also looked at what the government's reading would do to criminal exposure, since the Bank Secrecy Act uses the same idea of a "violation" for its criminal penalties. If each account were a separate violation, the Court explained, a case involving 5 reports and 272 accounts "would mean a person who willfully violates the BSA could face a $68 million fine and 1,360 years in prison rather than a $1.25 million fine and 25 years in prison." That result was a strong signal that the per-account reading proved too much.
The dissent
Justice Barrett's dissent argued that § 5314 imposes an account-specific obligation and that a "violation" has account-specific connotations throughout § 5321, including in the reasonable cause exception and the willful penalty. On her reading, Mr. Bittner violated the statute 272 times. Four Justices agreed. It was close, and it is worth knowing how close.
What It Means for Taxpayers Today
For nonwillful violations, the math is now simple. The maximum is $10,000 per annual report that was not timely or not compliant. Five bad years means a five-report ceiling, not a multiple of your account count. If the IRS has proposed or assessed a nonwillful penalty computed account by account, that computation does not survive Bittner.
Three cautions. First, Bittner is only about nonwillful violations. If the IRS says your failure was willful, the statute measures the maximum penalty by the account balance, and the Court specifically pointed to that account-level language. The line between willful and nonwillful is where the fight usually is. Read Norman v. United States and United States v. Rum to see how courts treat recklessness as willfulness.
Second, the reasonable cause exception still matters. Under § 5321(a)(5)(B)(ii), no nonwillful penalty applies if the violation was due to reasonable cause and the account balance was properly reported. If you can show reasonable cause, the penalty can be zero, not $10,000.
Third, $10,000 is a maximum, not a minimum. The statute says the penalty "shall not exceed" that amount.
Practical Takeaways
If you have unreported foreign accounts and you did not know about the requirement, get compliant, and get compliant accurately. Mr. Bittner's first round of late filings was itself deficient, which is how he ended up with a second round and a seven-figure proposal. File complete reports. Keep records of when and how you learned of the requirement. Those facts drive the willfulness question. Our overview of foreign bank account reporting covers the filing basics.
And if you are looking at an FBAR penalty letter, check the arithmetic against Bittner before you do anything else.
The Bottom Line
Bittner took the nonwillful FBAR penalty from a per-account multiplier back to what the statute says: up to $10,000 per report. For people who made honest mistakes with foreign accounts, that is the difference between a penalty and a catastrophe. For people the IRS calls willful, the analysis is very different, and that is where the next cases on this site pick up.