Crawford v. United States Department of the Treasury
868 F.3d 438
6th Cir.2017Background
- Plaintiffs (including Sen. Rand Paul and several U.S. citizens or former citizens living abroad) sued Treasury, IRS, and FinCEN seeking to enjoin enforcement of FATCA, related intergovernmental agreements (IGAs), and the FBAR willfulness penalty.\
- FATCA (2010) requires certain U.S. taxpayers to report foreign financial assets and imposes reporting/withholding obligations on foreign financial institutions (FFIs), including a 30% withholding "FFI Penalty" and a 30% "Passthru" withholding from payments to recalcitrant account holders.\
- Treasury implemented FATCA worldwide through IGAs with many jurisdictions (Model 1 and Model 2), under which foreign governments or FFIs report to the IRS or register/comply, often exempting compliant FFIs from FATCA withholding.\
- The Bank Secrecy Act’s FBAR requires U.S. persons with >$10,000 in foreign accounts to file FinCEN Form 114; willful failure can trigger a discretionary penalty up to the greater of $100,000 or 50% of the account value.\
- Plaintiffs alleged various harms—bank refusals to serve U.S. persons, difficulties opening/maintaining accounts, familial discord, and (Sen. Paul) deprivation of an opportunity to vote on IGAs. None alleged actual enforcement (penalty assessed) by the government.\
- The district court dismissed for lack of Article III standing and denied leave to amend; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge FATCA individual-reporting, Passthru, and FFI penalties | Plaintiffs say FATCA and its market effects (banks refusing U.S. clients, burdens on account holders) cause concrete harms and create imminent threat of enforcement | Government says plaintiffs allege no direct enforcement, most do not meet FATCA thresholds, harms are speculative or traceable to third-party banks, not the statutes | No standing: plaintiffs alleged no imminent or traceable injury from FATCA; market reactions are third-party choices and insufficient for Article III |
| Standing to challenge IGAs and their constitutionality (Sen. Paul) | IGAs are executive agreements exceeding Presidential power and deprive Senator Paul of his voting right; IGAs conflict with Congress's FATCA statute | Government says Senator’s alleged loss is a generalized institutional grievance and not particularized; remedies lie in the legislative process | No standing: legislative- standing doctrine bars Sen. Paul absent Coleman-like vote-nullification; his asserted injury is a generalized grievance |
| Standing to challenge FBAR willfulness penalty | Plaintiffs contend the discretionary, severe FBAR willfulness penalty is punitive and chills conduct; some allege account balances over $10,000 | Government notes no plaintiff intends to willfully violate FBAR or faces a certainly impending enforcement threat; willfulness penalty is discretionary | No standing: pre-enforcement challenge fails because plaintiffs lack credible threat of enforcement and do not allege intent to violate the statute |
| Redressability / traceability of alleged harms from banks’ private actions | Plaintiffs argue indirect harms from FFIs’ compliance choices are traceable to FATCA/IGAs (analogy to Roe) | Government contends injuries arise from voluntary, independent third-party bank decisions and market forces, not coercive government action | No standing: injuries are not fairly traceable to defendants; Roe analogy fails because FFIs had practical compliance options and plaintiffs could remain compliant rather than suffer alleged harms |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III injury must be concrete and particularized)\
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact, traceability, redressability)\
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (2013) (pre-enforcement challenge requires certainly impending injury; speculative fears insufficient)\
- Raines v. Byrd, 521 U.S. 811 (1997) (legislators generally lack standing for institutional injuries to Congress)\
- Coleman v. Miller, 307 U.S. 433 (1939) (legislator standing where individual votes would have been decisive)\
- Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014) (pre-enforcement standing standard: credible threat of enforcement)\
- Warth v. Seldin, 422 U.S. 490 (1975) (economic consequences of market conditions are insufficient for standing when not fairly traceable to defendant)\
- United States v. Miller, 425 U.S. 435 (1976) (no legitimate expectation of privacy in bank records)