Kostelanetz & Fink has filed an amicus brief on behalf of the American College of Tax Counsel (“ACTC”) in the U.S. Supreme Court case of Alexandru Bittner v. United States (No. 21-1195). The brief asks the Supreme Court to reverse a decision by the Fifth Circuit Court of Appeals that multiple civil penalties may apply per year for the non-willful failure to file a Report of Foreign Bank and Financial Accounts (“FBAR”).
As noted in a press release issued by ACTC, the issue in Bittner is whether a U.S. person should be subject to a single civil penalty for the non-willful failure to timely file an annual FBAR (the per form approach), or to separate penalties for each account not accurately reported on the FBAR (the per account approach). ACTC’s amicus brief explains that while the IRS has taken inconsistent positions over the years and is advocating for a per account in Bittner, past IRS administrative guidance and the applicable statutes and regulations support the per form approach.
The Fifth Circuit’s decision under review by the Supreme Court conflicts with a 2021 decision from the Ninth Circuit Court of Appeals. In March 2021, that court adopted the per form approach in United States v. Boyd, agreeing with the position advanced by ACTC in a separate amicus brief written by Ciraolo and Rule. This conflict, and conflicts among District Court decisions around the country, have created uncertainty for U.S. persons and advisors regarding the civil non-willful FBAR penalty regime, discouraging voluntary compliance and harming the regulatory system.
According to Ciraolo, “U.S. persons are entitled to clear, unambiguous, and reasonable interpretations of penalty statutes. The per account approach to non-willful FBAR penalties adopted by the Fifth Circuit results in penalties that can grossly exceed the penalties applied to taxpayers who willfully and intentionally violated their legal duty to file an accurate FBAR.”
The American College of Tax Counsel is “a nonprofit association of tax lawyers in private practice, law school teaching positions, and government, who are recognized for their excellence in tax practice and their substantial contributions and commitment to the profession. One of the chief purposes of the College is to provide a mechanism for input by tax attorneys into the development of U.S. tax laws and policy.” Ciraolo is the immediate past president of ACTC.