Page 3 - Penalties.The Government’s New Stance That the Non-Willful Civil FBAR Penalty Applies to.JTPP_22-02_Rule
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Except as provided in subparagraph (C) [below], that are not at issue in connection with the non-willful
the amount of any civil penalty imposed under civil FBAR penalty: the willful penalty that refers to
subparagraph (A) [which authorizes the imposi- “an account”; and a reasonable cause exception to the
tion of civil monetary penalties] shall not exceed imposition of any civil FBAR penalty that applies when
$10,000. 16 a violation was due to reasonable cause, and “the bal-
ance in the account at the time of the transaction was
This provision obviously has nothing to do with properly reported.” The government argues, and the
18
“accounts” or “relationships” or the number of accounts District Court in Boyd agreed, that because these inap-
on an FBAR. It plainly and simply provides for a maxi- plicable provisions use the singular form of “account”
mum single civil non-willful FBAR penalty of $10,000 and “balance,” the non-willful civil FBAR penalty
per year. Had Congress intended to impose a non- that is at issue relates to each single account reported
willful penalty based on each bank account required to on an untimely FBAR. But, since the baseline single
be reported on an FBAR, Congress could easily have maximum $10,000 non-willful civil penalty has no
included explicit language to that effect in the penalty relation to each “account,” much less the “balance” in
statute, but it clearly did not. each account, purported analogies to the willful FBAR
The only way the baseline single maximum $10,000 penalty and the reasonable cause exception are meaning-
penalty is increased is for willfulness: less. Nevertheless, the Boyd court, while admitting that
the penalty statute is “somewhat unclear as to whether
(C) Willful violations—In the case of any person will- the $10,000 negligence penalty applies per year or per
fully violating, or willfully causing any violation account,” held, with no meaningful analysis, that the
of, any provision of [the BSA statute]— singular language highlighted by the government in
the civil penalty provisions not at issue “advanced the
(i) the maximum penalty under subparagraph (B)(i) more reasonable interpretation” of the provision that
shall be increased to the greater of— was at issue. 19
(I) $100,000, or
(II) 50 percent of the amount determined Nevertheless, starting in 2019, a
under subparagraph
few cases have parroted the novel
(D) Amount—The amount determined under this conclusion reached by the District
subparagraph is—
Court in Boyd—that the non-
* * * willful civil FBAR penalty applies to
each account not reported on an
(ii) in the case of a violation involving a failure
to report the existence of an account or any untimely-filed FBAR—but these cases
identifying information required to be pro- have so held without any analysis
vided with respect to an account, the balance whatsoever.
in the account at the time of the violation. 17
So, in contrast to the baseline maximum $10,000 civil
penalty provision that applies to a single non-willful failure
to file a timely FBAR, the willful penalty varies accord- Commentary to 2010 Amendments to the BSA suc-
ing to the balances in unreported accounts—but it, too, cinctly demonstrates how the Boyd court was wrong about
is not calculated by the number of accounts that should how the civil FBAR penalty scheme works:
have been reported.
The fallacy in the government’s current arguments, A person who is required to file an FBAR and fails to
as well as the District Court’s decision in Boyd, is that properly file may be subject to a civil penalty not to
they both rely almost exclusively on statutory provisions exceed $10,000. If there is reasonable cause for the
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