Thursday, May 19, 2022

Solicitor General Acquiesces in Bittner Petition for Cert on Issue of FBAR Nonwillful Penalty Per Form or Per Account (5/19/22)

I previously discussed United States v. Bittner, 19 F.4th 734 (5th Cir. 11/30/21), CA5 here, and GS here, in which the Court held that the FBAR civil nonwillful penalty is applied per account rather than per form. See Fifth Circuit Applies FBAR NonWillful Penalty Per Account and Not Per Form (Federal Tax Crimes Blog 11/30/21), hereThat holding conflicted with a prior holding of the Ninth Circuit in United States v. Boyd, 991 F.3d 1077 (9th Cir. 2021), CA9 here and GS here. On February 28, Bittner filed a Supreme Court petition for writ of certiorari. The docket entries for documents related to that petition are here. On May 17, the Solicitor General filed the U.S. response, here, advising that the U.S. acquiesces in the petition (acquiesce was the term of art I recall from working at DOJ Tax Appellate in the 1970s) as follows (p. 12, bold supplied by JAT):


The court of appeals correctly determined that the Bank Secrecy Act authorizes the Secretary of the Treasury to impose a civil penalty of up to $10,000 on a U.S. person for each foreign financial account that the person fails to report as required by the Act and its implementing regulations, because each failure to report a qualifying account is a separate “violation,” 31 U.S.C. 5321(a)(5)(A), for which the Secretary may impose a separate penalty. Yet, as petitioner explains (Pet. 13-25), the decision below conflicts with a recent decision by a divided panel of the Ninth Circuit in United States v. Boyd, 991 F.3d 1077 (2021). The question presented is important and will often recur, and this case would be an appropriate vehicle in which to address it. Accordingly, the petition for a writ of certiorari should be granted.

Further, the Solicitor General said (pp. 18-19):

3. The division of authority between the Fifth and Ninth Circuits on the question presented is recent, and no other court of appeals has yet addressed whether the Secretary may assess a civil penalty of up to $10,000 for each foreign account that  a U.S. person fails to report on a single FBAR. Nonetheless, the question presented is important and likely to recur, and the government agrees with petitioner that the issue—a fairly straightforward and discrete question of statutory construction—warrants this Court’s review at this time.

In early March, I discussed Bittner’s petition with a friend, offering the following on the possibility of the Court granting cert.

Nevertheless, and this is speculation, I think the Court might accept this case. First, the Supreme Court usually accepts around 4 tax cases a session. This is not a tax case, but it is heavily tax flavored because tax noncompliance is almost always involved in FBAR noncompliance. Indeed, just within the last week, there was an FBAR penalty case where the Court opened with: “This is a tax case in which the Government alleges that Defendant Walter Schik, a Holocaust survivor, failed to file a foreign bank account reporting form with the Internal Revenue Service (the “IRS” or the “Service”).”  It is generally understood that the Supreme Court Justices do not particularly like tax cases. (That’s the rumor.)  So this case might be one they could accept to meet their informal quota of about 4. Second, it has been a very long time since the Court took an FBAR case. I don’t recall that it has ever accepted an FBAR civil penalty case. Since FBAR civil penalty commotion is wide-spread now, this could be one to take. Third, this is a binary choice – per form or per account – that might make the Court believe it will not be too draining on the Court’s resources and time to let it pontificate in the FBAR area. I think it’ll be interesting to see what the Court does.

The Solicitor General will file a responsive pleading in about 30 days unless extended. Almost always, the SG files a brief in opposition, but there are some cases where its brief will agree that cert is warranted, in which the Supreme Court would almost certainly take cert. 

At any rate, that was my story then and I am sticking to it.

Added 5/19/22 1:45am:  I think this would be a good case for the Court to spend its limited tax case resources on.  As noted, it is a binary issue and, outside the issue itself and the amounts involved, fairly limited in its potential impact.  In short, there is little systemic damage the Court can do here unless it really goes beyond the issue.  That is often a good thing for tax cases that reach the Supreme Court.  (Most observers of the Court's handling of tax cases can pull a quick list of case debacles where damage was done.)

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