Preface: “The whole object of travel is not to set foot on foreign land; it is at last to set foot on one’s own country as a foreign land.” – G. K. Chesterton
Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties
Alexandru Bittner, a Romanian–American dual citizen, made a mistake when he failed to report his foreign accounts. That much is clear. Neither he nor the IRS has ever suggested that his failure to report funds held in foreign bank accounts was willful. What has been disputed is how much he should pay for that mistake. The answer to that question is $50,000 or $2.72 million—depending on who you ask.
Today, the Supreme Court offered its response: $50,000.
In the 1980s, Bittner moved to the United States, and he eventually became a U.S. citizen. In the 1990s, Bittner returned to Romania, where he became quite successful, generating over $70 million in income through businesses and investment ventures. As he earned income, he stashed it in a number of institutions, including foreign banks.
As part of the Bank Secrecy Act (31 USC §5314), every U.S. person with a financial interest in, or signature or other authority over, one or more foreign financial accounts with an aggregate value of more than $10,000 must annually report the account to the Treasury Department. You do this by filing a Report of Foreign Bank and Financial Accounts—more commonly known as an FBAR. Failure to report can result in a penalty, depending on whether the failure was willful or non-willful. The penalties can be draconian, but typically, the penalty for a non-willful violation is $10,000.
Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties: Forbes