CASE PREVIEW
By Ronald Mann
on October 31, 2022
at 10:02 am
The argument on Wednesday at Bittner v. United States presents a routine interpretive problem. Specifically, for a citizen who owns multiple foreign bank accounts, whether failure to file an FBAR (the federal form describing a United States citizen’s foreign bank accounts) is a single violation of the Secrecy Act Bank (failure to file a single form) or multiple violations of the Bank Secrecy Act (failure to report multiple accounts). Because each violation carries a maximum penalty of $10,000, the difference for petitioner Alexandru Bittner is between a fine of $50,000 (for five years of late reporting) or $2.72 million (for 272 omissions from those five reports).
The relevant statute (31 USC § 5314) requires citizens to “keep records” and “submit reports” whenever “the person … maintains a relationship … with any foreign financial agency” and specifies that the relevant reports must ” contain … information [that] secretariat [of the Treasury] describe.” The relevant regulations require an annual Report of Foreign Bank and Financial Accounts (FBAR referred to above) from any person who has “foreign financial accounts in excess of $10,000 held during the preceding calendar year.”
Bittner focuses on the language of the statutory obligation—to “file reports”—claiming that failure to file a single report can only be a violation of the statutory command that a taxpayer “report.” He also points out that the regulatory command applying the statute is related (in the passage quoted above) not to the number of accounts, but to the total balance in all accounts.
In contrast, the government points to the language of section 5321, the provision authorizing the imposition of a penalty, and contends that it consistently describes a “violation” as something that is “account specific.” Thus, for example, an exception prohibiting a penalty when the citizen has “reasonable cause” for the violation depends on the “account balance” (singular) not being reported. Similarly, the subsequent paragraphs specifying the maximum penalty for each offense relate the maximum to “the balance in the account at the time of the offence” (again, singular).
Bittner responds forcefully, pointing to the Dictionary Act, which specifies that “[i]n to determine the meaning of any Act of Congress, words in the singular “include and apply to” things in the plural, and “words importing the plural include the singular.” Thus, for Bittner, all references to the balance in “the [undisclosed] account” are read as easily as referring to the state in all “the [undisclosed] ACCOUNT[s].”
The parties spend a large portion of their pages trying to control the narrative. Bittner’s advice portrays him as an innocent Romanian who came here to escape communism, became a citizen and then returned to Romania after the fall of communism. He specifically points out that as long as the case comes to the Supreme Court, it includes penalties for willful failure to report. From this perspective, giving the Treasury secretary the discretion to impose a fine of nearly three million dollars for a completely innocent misunderstanding of American law is a major overreach. In contrast, the government portrays Bittner as a wealthy tycoon, pointing to more than $70 million in income generated by his various overseas ventures. The amount of under-reporting of foreign accounts is massive, he explains; this is just the kind of information the government needs to respond to the massive money laundering problem plaguing our financial regulators.
For my part, I find the statutory arguments largely equal, since neither the statute nor the regulations appear designed to answer the particular question before the court. It may happen, therefore, that some of the judges will rely on their impression of the equality of the situation in assessing how to resolve the problem before them. We’ll see on Wednesday.
