Wednesday March 1, 2023 – Back in January we did a story about The Supreme Court refusing to hear a case of excessive fines for inadvertently failing to file a timely bank disclosure form called the FBAR (Report of Foreign Bank and Financial Accounts).
Justice Gorsuch issued a rare dissenting opinion in that case. And now it makes sense. On Tuesday, the United States Supreme Court limited the IRS’s ability to impose penalties when taxpayers unintentionally make errors in reporting foreign accounts. The majority opinion was written by Justice Neil M. Gorsuch. He reasoned that the relevant legal duty is to file reports, not individual accounts.
The case concerned Alexandru Bittner, an immigrant and dual citizen who failed to disclose his foreign accounts while living overseas. Lawyers argued that the FBAR should only carry a fine of $50,000, or $10,000 per year. Not the nearly $3 million penalty initially imposed by the IRS, based on the number of accounts.
Justice Amy Coney Barrett disagreed and wrote a dissent arguing that the FBAR is an annual form requiring separate penalties for each account not reported. The ruling is important news for taxpayers who worry about FBAR penalties and adds clarity to the IRS’s authority when it comes to FBAR violations. With this ruling, SCOTUS has ensured that taxpayers will not be unfairly penalized by the IRS for unintentional FBAR mistakes. That’s a win for everyone. Thank you SCOTUS! God bless America! Now, how can we go back to the Toch case and correct that wrong?
Attorney Steven A. Leahy analyses this recent Supreme Court decision on Today’s Tax Talk.
https://www.washingtontimes.com/news/2023/feb/28/supreme-court-sides-immigrant-challenging-irs-pena/
https://www.supremecourt.gov/opinions/22pdf/21-1195_h3ci.pdf
https://vimeo.com/manage/videos/793168156
https://www.supremecourt.gov/opinions/22pdf/22-177_d0fi.pdf
Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649
