Last week, the U.S. Supreme Court limited the ability of the IRS to impose penalties on those who do not report foreign accounts.
The Case & the Bank Secrecy Act
In Bittner v. United States, U.S. Supreme Court (No. 21-1195), the Supreme Court justices, in a 5-4 ruling sided with Alexandru Bittner, a dual U.S.-Romanian citizen who argued the maximum penalty he should face to the Bank Secrecy Act was $50,000. According to the U.S. Treasury, that law aims to combat money laundering and tax evasion by requiring U.S. citizens and residents to file reports disclosing their foreign bank accounts. Non-willful violations of the law are subject to a maximum penalty of $10,000 per violation.
According to Reuters, the IRS contended Bittner had violated the law 272 times based on the number of accounts listed in his belated reports over five years. Bittner said he should be penalized for just five violations, reflecting the number of reports he failed to file disclosing as much as $16 million he had spread across more than 50 bank accounts in Romania, Switzerland and Liechtenstein.
Conservative Justice Neil Gorsuch wrote for last week’s majority and said the statute never authorized per-account violations, stating that in contrast with how Congress authorized per-account penalties for some willful violations, “conspicuously, the one place in the statute where the government needs per-account language to appear is the one place it does not.”
How We Can Help
This new law will impact companies or individuals with personal or corporate monetary ties outside the U.S. Contact your RJI CPA today to learn how we can help assess your potential risk and opportunities.