Section 5321 - Civil penalties

73 Analyses of this statute by attorneys

  1. The FBAR (Report of Foreign Bank and Financial Accounts): Everything You Need to Know

    Freeman LawJason FreemanJuly 26, 2021

    For several years, the IRS has publicly touted its intention to strongly enforce the FBAR reporting requirements.In addition, a failure to file a FBAR report may result in exposure to civil penalties, including up to half of the balance in all unreported accounts if the government determines that the failure to report was willful or reckless.Current penalties (adjusted for inflation) are as follows:U.S. Code citationCivil Monetary Penalty DescriptionCurrent Maximum31 U.S.C. 5321(a)(5)(B)(i)Foreign Financial Agency Transaction – Non-Willful Violation of Transaction$12,92131 U.S.C. 5321(a)(5)(C)Foreign Financial Agency Transaction – Willful Violation of TransactionGreater of $129,210, or 50% of the amount per 31 U.S.C.5321(a)(5)(D)31 U.S.C. 5321(a)(6)(A)Negligent Violation by Financial Institution or Non-Financial Trade or Business$1,11831 U.S.C. 5321(a)(6)(B)Pattern of Negligent Activity by Financial Institution or Non-Financial Trade or Business$86,976FBAR Statutory AuthorityThe statutory authority for the FBAR is found under 31 USC § 5314. Section 5314 directs the Secretary of the Treasury to require a resident or citizen of the United States to keep records and/or file reports when making transactions or maintaining a relationship with a foreign financial agency.

  2. The FBAR (Report of Foreign Bank and Financial Accounts): Everything You Need to Know

    Freeman LawJason FreemanOctober 21, 2020

    For several years, the IRS has publicly touted its intention to strongly enforce the FBAR reporting requirements.In addition, a failure to file a FBAR report may result in exposure to civil penalties, including up to half of the balance in all unreported accounts if the government determines that the failure to report was willful or reckless.Current penalties (adjusted for inflation) are as follows:U.S. Code citationCivil Monetary Penalty DescriptionCurrent Maximum31 U.S.C. 5321(a)(5)(B)(i)Foreign Financial Agency Transaction – Non-Willful Violation of Transaction$12,92131 U.S.C. 5321(a)(5)(C)Foreign Financial Agency Transaction – Willful Violation of TransactionGreater of $129,210, or 50% of the amount per 31 U.S.C.5321(a)(5)(D)31 U.S.C. 5321(a)(6)(A)Negligent Violation by Financial Institution or Non-Financial Trade or Business$1,11831 U.S.C. 5321(a)(6)(B)Pattern of Negligent Activity by Financial Institution or Non-Financial Trade or Business$86,976FBAR Statutory AuthorityThe statutory authority for the FBAR is found under 31 USC § 5314. Section 5314 directs the Secretary of the Treasury to require a resident or citizen of the United States to keep records and/or file reports when making transactions or maintaining a relationship with a foreign financial agency.

  3. High Time for the High Court to Handle FBAR?

    International Wealth Tax AdvisorsJanuary 5, 2022

    Federal district courts around the country are handling a torrent of litigation on an unsettled and costly question in FBAR litigation — how should penalties for non-willful violations be calculated? The federal statute in play, 31 U.S.C. 5321(a)(5)(A), says non-willful FBAR penalties apply per violation but it does not specify whether a violation occurs for each unreported account or for each annual FBAR that is filed, which is a yearly compilation of a taxpayer’s foreign accounts.The issue has made its way up to the federal circuit courts of appeal, where a circuit split quickly developed.

  4. The BSA Civil Penalty Regime: Reckless Conduct Can Produce “Willful” Penalties

    Ballard Spahr LLPPeter HardyAugust 2, 2018

    BSA Penalties for “Willful” vs. “Negligent” Conduct The difference between a civil BSA penalty for “willful” conduct and a civil BSA penalty for “negligent” conduct can be stark. The relevant statute, 31 U.S.C. § 5321, generally provides in Section 5321(a)(6) for a civil penalty of no more than $500 for each negligent BSA violation by a business, with a higher potential penalty of up to $50,000 for a “pattern of negligent violations” by a business. Contrast these penalties with those imposed for civil BSA violations deemed to be “willful.”

  5. Same Statute, Same Form, Different Penalties: Welcome to FBAR Litigation

    Holland & Knight LLPJanuary 10, 2022

    The "Report of Foreign Bank and Financial Accounts" (FBAR) penalty has been the subject of much litigation. This Holland & Knight alert focuses on the non-willfulness element of 31 U.S.C. § 5321(a)(5)(B). Both the U.S. Court of Appeals for the Ninth Circuit and the Fifth Circuit claim the statutory language provides for one result and yet they reached opposite conclusions.

  6. Court Strikes Down Largest Non-Willful FBAR Penalty Ever

    Freeman LawMatthew RobertsOctober 10, 2020

    Finally, the Court’s Opinion rules in favor of the government on the issue of whether Mr. Bittner had shown reasonable cause for abatement of the penalties.The Statutory Analysis.Under 31 U.S.C. § 5321(a)(5)(A), “[t]he Secretary of the Treasury may impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314.” Under the next subsection, “the amount of any civil penalty imposed under subparagraph (A) shall not exceed $10,000.”

  7. FBAR Penalties: Another Court Holds that FBAR Penalties Can Exceed the Regulatory Ceiling

    Freeman LawJason FreemanAugust 6, 2021

    That is, after all, exactly what the regulation says. The government, however, argued that the regulation was effectively superseded by a 2004 statutory amendment: Under 31 U.S.C. § 5321 as amended in 2004, it argued, the maximum penalty for a willful failure to file an FBAR is 50 percent of the aggregate balance in the accounts at the time of that failure.The upshot?

  8. Docket Check: US Supreme Court to Decide Key Criminal and Regulatory Cases This Term

    Jackson WalkerOctober 13, 2022

    ttner emigrated to the United States from Romania in December 1982. He became a naturalized American citizen in 1987. Shortly thereafter, he moved back to Romania while retaining his dual-citizenship. From 1990 to 2011, Bittner generated more than $70 million in income from various businesses and investments. He stored at least some of that income in a number of foreign financial accounts, many of which had a balance that exceeded $10,000. Unbeknownst to him, he was required to report his foreign financial accounts to the United States by filing a governmentally mandated Report of Foreign Bank and Financial Accounts, or FBAR. Bittner failed to file an FBAR From 1996 to 2011.After Bittner returned to the United States in 2011, a professional accountant informed him that he needed to file an FBAR. He filed his first FBAR in 2012, and he then filed amended FBARs for years 2006-2010 in 2013. The Internal Revenue Service responded by levying a $2,720,000 penalty against Bittner pursuant to 31 U.S.C. § 5321(a)(5)(A) and (B), which authorizes the Secretary of the Treasury to penalize non-willful “violations” of the Bank Secrecy Act’s, 31 U.S.C. § 5314 et seq., implementing regulations. Those regulations serve as the basis for the FBAR filing requirement. See 31 C.F.R. §§ 1010.350(a) and .360. Based on the IRS’s findings, the United States brought an action to collect the judgment. The parties then filed cross-motions for summary judgment. The parties agreed that given the statutory-regulatory scheme, it is the failure to file an FBAR that triggers § 5321’s civil penalty provisions. They disagreed, however, on how to calculate the penalty.According to the Government, Bittner failed to report 272 accounts between 2007 and 2011. Thus, when the $10,000 penalty provided for under § 5321(a)(5)(B)(i) is calculated on a per-account basis, Bittner owed the United States $2,720,000. Bittner disagreed, asserting that any violation should be calculated on a per-report basis, regardless of the number of accoun

  9. Supreme Court to Review Tax Penalties Imposed for Non-Willful FBAR Violations

    Bowditch & DeweyJuly 18, 2022

    Under regulations to the BSA, the Secretary of the Treasury requires U.S. taxpayers to file a report on or before June 30th of each calendar year with respect to foreign financial accounts exceeding $10,000.The BSA authorized the Secretary to “impose a civil money penalty on any person who violates, or causes any violation of . . .” the FBAR rules (31 U.S.C. § 5321(a)(5)(A)). Initially, only willful violations of the FBAR reporting rules were subject to penalty.

  10. A Current “Playoff Picture” of Non-Willful FBAR Violations

    Freeman LawZachary MontgomeryJanuary 22, 2022

    31 U.S.C. § 5321A U.S. person may be subject to certain civil and/or criminal penalties for FBAR reporting violations. 31 U.S.C. § 5321(a)(5) states, in part, as follows:(5) Foreign financial agency transaction violation.—(A) Penalty authorized.