Taxpayer in a Dispute over Foreign Bank Account Reporting

Divided Supreme Court of the United States Rules in Favor of Taxpayer in a Dispute over Foreign Bank Account Reporting

Chicago, Illinois (February 28, 2023) In a 5-4  opinion  delivered by Justice Gorsuch, the Supreme Court held in Bittner v. United States, 598 U.S. ___ (2023) that taxpayers who make non-willful errors or omissions on their Report of Foreign Bank Accounts, or FBARs, will only face one penalty per form, regardless of the number of accounts for which the taxpayer made a non-willful error.  The Supreme Court’s holding ensures that taxpayers who fail to comply with the Bank Secrecy Act’s FBAR requirements and do not do so willfully will have a maximum penalty of $10,000 per form, not $10,000 per account.

Moore Tax Law Group, LLC was proud to represent the Center for Taxpayer Rights, which joined the American College of Tax Counsel as amicus curie in Bittner.  “Taxpayer rights are fundamental to a system based upon voluntary compliance,” says Elizabeth J. Atkinson, a partner with Whiteford, Taylor, Preston LLP and a member of the Board of Directors for the Center for Taxpayer Rights. “When penalties are applied harshly, the effect is to lower overall compliance and to create distrust. See the  TAS research study, especially footnote 20.”  Speaking on behalf of the Center, Atkinson added that the Center is gratified that the Court upheld “the Due Process Clause’s promise of  ‘a fair warning should be given to the world in language the common world would understand…’”

“I was honored to represent the Center for Taxpayer Rights in this case and help advance the cause on behalf of taxpayers,” says Guinevere Moore, lead counsel for the Center and managing member of Moore Tax Law Group.  “We thought long and hard about what arguments to advance that would demonstrate to the Court just how dire the impact of the government’s interpretation of the FBAR law was, especially for low-income and immigrant taxpayers.  Having the Court cite to our brief and expressly find that the Rule of Lenity required this result was a highlight of my professional career,”  Moore added.  The Rule of Lenity is a long-standing principle of statutory construction that requires statutes imposing penalties against individuals to be strictly construed against the government.

“As an immigrant myself, I am personally aware of the difficulties that immigrant communities face in matters of tax compliance,” explained Zhanna Ziering, co-counsel for the Center for Taxpayer Rights and partner in Moore Tax Law Group.  “Complexities of the U.S. tax reporting obligations combined with language barrier, lack of tax education during the integration process, and reliance on tax return prepares servicing the community can easily result in innocent reporting missteps.  The Court’s decision ensures that the penalties for these mistakes will be commensurate with the violation, and not disproportionally sanction individuals solely based on the number of accounts they maintained.”  Ms. Ziering is a nationally recognized FBAR expert and is the co-author of Bloomberg’s BNA Tax Management Portfolio, Report of Foreign Bank and Financial Accounts. “The government has had a long and overwhelming record of victories in FBAR enforcement and began taking an overly-aggressive and unfair approach to administering the FBAR penalties.  We hope this is the first step in curtailing penalties that are not necessary to fairly administer our tax laws,” Ziering added.

About Moore Tax Law Group, LLC

Moore Tax Law Group is a leading tax controversy and tax litigation boutique, representing United States taxpayers from all over the world in high-stakes criminal and civil disputes with the United States.  The firm represents clients at all stages of disputes, from an IRS criminal or civil exam to the United States Supreme Court.  We are creative and zealous advocates who are deeply committed to defending taxpayers and accomplishing the best possible results.  The team’s unique approach to client counseling helps ensure that clients who are facing a dispute with the United States know what to expect and are equipped with the tools to handle it.