The Tax Times: Scotus Won't Hear FBAR Constitutional Challenge By "Pro Se" Taxpayer

Wednesday, October 9, 2024

Scotus Won't Hear FBAR Constitutional Challenge By "Pro Se" Taxpayer

According to Law360, The U.S. Supreme Court let stand on October Seventh 2024 a Seventh Circuit decision dismissing a man's challenge to the constitutionality of the Bank Secrecy Act's requirement to report his foreign bank accounts, effectively ending the man's claim that the filings were an invasion of privacy.

In an order, the high court denied the petition of George Gaio Mano, a U.S. citizen living in Japan, who had petitioned the court in July to overturn a requirement that he file a Report of Foreign Bank and Financial Accounts, or FBAR, for 2022.

While a federal district court had denied Mano's claims on the merits, the Seventh Circuit in May upheld the dismissal on additional grounds that the case had become moot. After filing his appeal, Mano chose to file an FBAR for 2022, the appellate court said in its ruling.

He didn't choose to file an FBAR, he said. Rather, he was "coerced" into making the report after the Seventh Circuit twice rejected his motion for a temporary injunction, he said.

Mano, who represented him self "Pro se," said that the "Petitioner's choice was either file FBAR or break the law."

Mano had argued that the reporting requirements stemming from the Bank Secrecy Act were disconnected from the law's purpose and served primarily "to intimidate and control U.S. citizens who have committed no crimes," according to his petition.

He claimed the government was wrongly allowed to create a "mass collection of private banking data" that violated several amendments to the Constitution, including the right to privacy.

Rather than report his Japanese account for 2022, which Mano was required to do because his bank balance exceeded $10,000, he sued U.S. Treasury Secretary Janet Yellen, the Treasury Department and the Internal Revenue Service. The reporting requirement violated the Fourth Amendment because it was an unreasonable search and seizure, he claimed. It also violated the due process rights under the Fifth Amendment, Mano's right to privacy under the Ninth and Tenth amendments and the Fifth Amendment's privilege against self-incrimination, he argued.

A federal district court disagreed. Prior cases such as California Bankers Assn. v. Shultz have held that the filing requirement is not an unreasonable search or seizure, it said. It also ruled Mano did not adequately develop his due process argument, and failed to allege any violation of the privilege against self-incrimination. It also concluded that the Ninth and Tenth amendments did not afford Mano a right to privacy.

On appeal, the Seventh Circuit ruled that the Bank Secrecy Act does not create a privately enforceable claim. The Constitution also does not have an automatic cause of action allowing private enforcement in courts, the appellate court said.

However, after bringing suit, Mano went ahead and reported his bank account, which left him with no cause of action, the court said. Any harm from having to file another report is speculative, it said, noting that Mano regularly withdraws enough money from the account to keep the balance under $10,000.

In August, the federal government waived its right to respond to Mano's petition.

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