Bittner v. United States: The Non-Willful FBAR Penalty Is Per Report, Not Per Account

Alexandru Bittner was a dual citizen of Romania and the United States. He learned about his FBAR obligations after he returned to the United States from Romania in 2011. He then filed reports covering 2007 through 2011. The government found those late reports deficient because they did not address every account, so he filed corrected FBARs. The corrected reports listed 61 accounts for 2007, 51 for 2008, 53 for 2009 and 2010, and 54 for 2011.

The government did not contest the accuracy of the corrected filings. It did not claim his errors were willful. It still calculated a non-willful penalty of $2.72 million, by applying a $10,000 penalty to each of 272 accounts across five years.

The Fifth Circuit upheld that number. The Supreme Court reversed. Bittner v. United States, 598 U.S. 85 (2023), decided February 28, 2023, holds that the Bank Secrecy Act's $10,000 maximum penalty for the non-willful failure to file a compliant report accrues on a per-report basis, not a per-account basis.

What the Court actually said

Justice Gorsuch wrote for the Court. The analysis starts with the two statutes. 31 U.S.C. 5314 imposes the duty to file reports. 31 U.S.C. 5321 imposes the penalties. The Court read section 5314 as describing a legal duty to file reports, not a duty that multiplies with each account listed on the report.

The syllabus summarizes the conclusion simply: best read, the Bank Secrecy Act treats the failure to file a legally compliant report as one violation carrying a maximum penalty of $10,000. The Fifth Circuit's judgment, reported at 19 F.4th 734, was reversed and the case remanded.

The opinion also notes the oddities the government's reading would create. The Court pointed out that, under the per-account theory, someone who makes non-willful errors in listing many small accounts could face a larger penalty than someone who willfully fails to file at all. The per-report reading avoids that result.

What it means in dollars

Under Bittner, the non-willful exposure is counted by years, not accounts. Five late or defective FBARs mean, at most, five non-willful penalties, no matter how many accounts were on them. Mr. Bittner's own argument put it this way: five untimely reports might invite a penalty of $50,000, but cannot support one running into the millions.

The statutory number is $10,000, but it is adjusted for inflation. Under 31 CFR 1010.821, the maximum non-willful penalty is $16,536 for penalties assessed on or after January 17, 2025. The math is the same idea: one maximum per report, per year.

That is a ceiling, not a floor. The statute says the penalty "shall not exceed" the maximum. The IRS has discretion to assert less, and the statute bars any penalty if the violation was due to reasonable cause and the balance was properly reported.

How the IRS computes non-willful penalties now

The IRS rewrote its examiner guidance after Bittner. The current IRM 4.26.16, revised August 26, 2025, states that it incorporates the interim guidance the IRS issued on FBAR examination procedures because of the Supreme Court decision.

Under IRM 4.26.16.5.4.1, in most cases of non-willful violations, examiners will recommend one $10,000 penalty, adjusted for inflation, per violation. Examiners are told to use discretion to set a penalty commensurate with the facts and circumstances. And there is a ceiling: in no event will the total non-willful penalties among all open years exceed 50 percent of the highest aggregate balance of all foreign accounts to which the violations relate for the years under examination.

The manual also says a non-willful penalty should not be imposed if the violation was due to reasonable cause and accurate delinquent or amended FBARs are filed to fix the prior violations.

Before a penalty comes into play at all, IRM 4.26.16.5.2.1 lets the examiner decide that the facts do not justify one. The examiner may issue a warning letter, Letter 3800, and secure the delinquent FBARs instead. The listed factors include whether a warning letter would achieve compliance, prior warnings or penalties, the nature of the violation and amounts involved, the filer's conduct, cooperation during the examination, account balances, and the total of all penalties being asserted.

If you receive a proposed penalty

When an examiner proposes FBAR penalties, IRM 4.26.17 describes a report package that includes Letter 3709, the FBAR 30-day letter, along with Form 13449, an agreement to assessment and collection of the penalties. Signing Form 13449 agrees to the penalty. Do not sign it until you understand whether the computation follows Bittner and the current IRM, and whether reasonable cause was properly considered.

The 30-day letter is the point to take the case to the IRS Independent Office of Appeals if you disagree. Thirty days goes quickly, especially across time zones.

What Bittner did not change

This is where I see people overread the case.

• Willful penalties are a different statute and a different formula. For willful violations, 31 U.S.C. 5321(a)(5)(C) sets the maximum at the greater of $100,000, inflation adjusted, or 50 percent of the balance in the account at the time of the violation. Bittner was about non-willful penalties. Read the willful penalty guide for that side of the line.
• Form 8938 and other information return penalties are separate. The penalty for failing to file Form 8938 under 26 U.S.C. 6038D is its own penalty, under the Internal Revenue Code, with its own rules. See Form 8938 penalties.
• Tax on unreported income is separate. If foreign accounts produced income that was not reported, the tax, interest and any accuracy-related penalty are a different problem from the FBAR.
• The statute of limitations still matters. The government has six years to assess an FBAR civil penalty under 31 U.S.C. 5321(b)(1). See the FBAR statute of limitations guide.

Why this matters for Americans abroad

Mr. Bittner's facts are familiar to anyone who works with Americans abroad. A person with a life, a career and a family in another country. Many ordinary accounts in that country. No idea about a U.S. reporting form. Then, once they find out, an effort to comply.

Before Bittner, people with many small foreign accounts faced the possibility of non-willful penalties that scaled with the number of accounts. After Bittner, the worst-case non-willful math is tied to the number of years. That changes the calculation when you are deciding how to come into compliance, including whether the Streamlined Foreign Offshore Procedures or a reasonable cause submission makes more sense for you.

A practical way to think about your exposure

If you are trying to size the worst case for missed FBARs that were not willful, start with the number of years still open under the six-year assessment period, multiply by the inflation-adjusted per-report maximum for the year of assessment, and then compare that number against the IRM ceiling of 50 percent of the highest aggregate balance. Then remember that the maximum is a ceiling. Reasonable cause, cooperation and corrected filings can bring the real number down, sometimes to zero with a warning letter.

That arithmetic is not a substitute for advice on your facts, but it usually replaces a terrifying guess with a manageable number.

What to do with this

If the IRS has proposed non-willful FBAR penalties against you that were computed per account for years governed by this rule, that computation is wrong under Bittner, and it should be challenged.

If you have not been contacted yet, Bittner is good news but not a reason to wait. The streamlined procedures are not available once the IRS has started a civil examination, and a reasonable cause argument is always stronger when you came forward on your own.

The Supreme Court did a lot of work to keep a paperwork mistake from becoming a financial catastrophe. Do your part by fixing the paperwork. If you want help, let's talk.