The Tax Times: Another In a Series of Taxpayer FBAR Penalty Being Reduced Based on Bittner

Wednesday, June 7, 2023

Another In a Series of Taxpayer FBAR Penalty Being Reduced Based on Bittner

According to Law360, an American facing almost $246,000 in penalties for failing to report her foreign bank accounts could pay much less, as the Eleventh Circuit said in U.S. v. Sali Hadley, case number 22-12250, in the U.S. Court of Appeals for the Eleventh Circuit. The Appeals Court stated that they must review her case in light of a U.S. Supreme Court ruling in February.

The Eleventh Circuit's order, issued Friday, June 2, 2023 said that Bittner v. U.S., in which the high court held that the $10,000 maximum penalty for nonwillful failure to file Reports of Foreign Bank and Financial Accounts, or FBARs, applies per year and not per account, requires another look at the case brought by Sali Hadley.

The U.S. had alleged that Hadley failed to report 18 foreign accounts she held in 2011 and five foreign accounts she held in 2012, according to court documents.

A Federal Court Penalized Her $10,000 Per Account For Nonwillful Failure To Report, Resulting In A Federal District Court Ordering Her To Pay $246,000.

Hadley had claimed that the penalty was excessive and should be only $10,000 per yearly form reporting the accounts, not per account. The court rejected her claim, holding that the Bank Secrecy Act set the penalty as applying per banking relationship, a finding contrary to the result in Bittner.

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