469 F.Supp.3d 709
E.D. Tex.2020Background
- Alexandru Bittner, a U.S.-Romanian dual citizen, lived in Romania from 1990–2011 and maintained multiple foreign financial accounts with aggregate high balances over $10,000 (1996–2011).
- Bittner did not timely file FBARs for years at issue (2007–2011); IRS assessed non-willful FBAR penalties computed per account (initial claim $2,720,000); Government sought judgment (and in its motion sought $1,770,000 based on admitted accounts).
- Central legal question: whether the non-willful civil penalty under 31 U.S.C. § 5321(a)(5)(A) & (B)(i) is assessed per annual FBAR (per year) or per unreported foreign account (per account per year).
- The statute imposes a maximum $10,000 penalty for a non-willful violation; willful penalties expressly reference individual account balances and different, larger caps.
- Court concluded non-willful FBAR violations are per annual FBAR (per year) with a $10,000 cap per year, not per account, and therefore rejected the Government’s per-account calculation.
- Court granted Bittner’s partial summary judgment, granted the Government summary judgment only on reasonable-cause (finding no reasonable cause), denied other relief sought by Government; Eighth Amendment challenge rendered moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statutory meaning of non-willful FBAR penalty (per-account vs per-form) | Penalty applies per foreign account not timely reported (multiplicative per-account exposure). | Penalty applies per annual FBAR report (one violation per year), capped at $10,000. | Held: penalty is per FBAR (per year), maximum $10,000 per year regardless of number of accounts. |
| Use of reasonable-cause exception | Government: reasonable cause not shown; penalties stand. | Bittner: facts (education, foreign residence, later remediation) create fact issue on reasonable cause. | Held: no genuine fact issue — Bittner failed to show reasonable cause; Government entitled to summary judgment on that defense. |
| Rule of lenity / strict construction of penalty statutes | Government: statute unambiguous; lenity inapplicable. | Bittner: any ambiguity should be resolved in defendant’s favor. | Held: statute is not grievously ambiguous; if lenity applied it would favor Bittner, but decision rests on textual/structural analysis. |
| Precedent United States v. Boyd (and related district rulings) | Gov’t relied on Boyd/other district opinions adopting per-account approach. | Bittner: Boyd is unpersuasive; statute’s text/structure contradicts Boyd. | Held: Court declined to follow Boyd, finding its reasoning insufficient and preferring per-form reading. |
| Eighth Amendment challenge (excessive fine) | Bittner: large aggregate penalty is excessive. | Government: penalties lawful. | Held: Moot given the Court’s statutory ruling reducing exposure; Court did not decide Eighth Amendment merits. |
Key Cases Cited
- Cal. Bakers Ass'n v. Shultz, 416 U.S. 21 (1974) (describing BSA purpose and that penalties attach to Treasury regulations)
- Hamdan v. Rumsfeld, 548 U.S. 557 (2006) (negative inference from Congress’s inclusion/exclusion of language within a statute)
- Russello v. United States, 464 U.S. 16 (1983) (presumption that disparate statutory language was intentional)
- Commissioner v. Acker, 361 U.S. 87 (1959) (penal/tax statutes construed strictly)
- Barber v. Thomas, 560 U.S. 474 (2010) (rule of lenity applies only if grievous ambiguity remains)