United States v. Bittner
19 F.4th 734
5th Cir.2021Background
- Alexandru Bittner, a naturalized U.S. citizen, maintained dozens of foreign bank accounts while living in Romania (2007–2011) but did not file FBARs; he later filed corrected FBARs for 2007–2011 in 2013 after returning to the U.S.
- The IRS assessed $2.72 million in civil penalties ($10,000 per unreported account per year for 2007–2011 based on admitted account counts).
- Bittner sued/defended, arguing (1) his violations were non-willful and due to reasonable cause, (2) the $10,000 statutory cap applies per annual FBAR (per-form) rather than per account, and (3) the penalties were unconstitutionally excessive.
- The district court found Bittner liable, rejected his reasonable‑cause defense, but held the $10,000 cap applies per‑form and entered $50,000 judgment ($10,000 for each year 2007–2011).
- Both parties appealed; the Fifth Circuit affirmed denial of reasonable cause, reversed the district court on penalty application, held the $10,000 cap applies per account (not per form), and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bittner established a "reasonable‑cause" defense to non‑willful FBAR violations | United States: Bittner failed to exercise ordinary business care; no reasonable cause | Bittner: Lacked awareness, limited U.S. contacts, language barrier, filed corrected FBARs promptly | Denied: Bittner did not meet objective ordinary‑business‑care standard; summary judgment rejecting reasonable cause affirmed |
| Whether the $10,000 maximum penalty for non‑willful violations applies per account or per annual FBAR form | United States: Cap applies per unreported account (per‑account) | Bittner: Cap applies once per annual FBAR (per‑form) | Reversed district court: Cap applies per account; each failure to report a qualifying account is a separate violation |
| Whether the underlying "violation" in 31 U.S.C. § 5321(a)(5)(A) refers to statutory duty to report accounts or only to the regulatory FBAR filing requirement | United States: "Violation" means failure to report each qualifying account under § 5314 | Bittner/district court: "Violation" means failure to file the annual FBAR form | Held for United States: "Violation" refers to failing to report an account under § 5314 (statutory duty), not merely per‑form filing failure |
| Whether the Eighth Amendment excessive‑fines claim was resolved | United States: Not an obstacle if penalties are applied per account | Bittner: $2.72M assessment is excessive | District court deemed Eighth Amendment claim moot under its per‑form holding; Fifth Circuit did not decide on excessiveness after reversing on penalty scope (claim to be addressed on remand as appropriate) |
Key Cases Cited
- Cal. Bankers Ass'n v. Shultz, 416 U.S. 21 (1974) (background on BSA reporting regime and role of regulations)
- United States v. Boyle, 469 U.S. 241 (1985) (taxpayer bears heavy burden to establish reasonable cause; duty to ascertain deadlines)
- McDermott Int'l, Inc. v. Wilander, 498 U.S. 337 (1991) (use of a legal term of art implies established meaning)
- F.A.A. v. Cooper, 566 U.S. 284 (2012) (when statute borrows a term of art, it adopts its established cluster of ideas)
- United States v. Castleman, 572 U.S. 157 (2014) (presumption of consistent usage across statutory text)
- Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320 (2015) (prior‑construction canon—use same meaning as earlier settled constructions)
- Barnhart v. Sigmon Coal Co., 534 U.S. 438 (2002) (Congress could have referred explicitly to regulations if it intended to do so)
- United States v. Yankowski, 184 F.3d 1071 (9th Cir. 1999) (rejecting reliance on an out‑of‑context Supreme Court statement where statute text governs)
- Lexon Ins. Co. v. Fed. Deposit Ins. Corp., 7 F.4th 315 (5th Cir. 2021) (identical terms within an act bear the same meaning)
- Evanto v. Fed. Nat'l Mortg. Ass'n, 814 F.3d 1295 (11th Cir. 2016) (definite article plus singular noun suggests a single, account‑specific reference)