FBAR Penalties After Bittner: What the Supreme Court Decision Means for Expats
The Supreme Court's Bittner decision held that non-willful FBAR penalties accrue per report, not per account. Learn what this means for penalty exposure and catch-up decisions.
The Supreme Court's 2023 decision in United States v. Bittner fundamentally changed how non-willful FBAR penalties are calculated. For Americans living abroad who have multiple foreign accounts and missed filings, this decision can mean the difference between manageable penalties and financial devastation.
What Bittner Decided
In a 5-4 decision, the Supreme Court held that non-willful FBAR penalties apply per report, not per account.
Before Bittner
The government argued that each unreported foreign account was a separate violation. If you had 5 accounts and failed to file for 3 years, the government could theoretically assess:
$10,000 base × 5 accounts × 3 years = $150,000 maximum
With inflation adjustments, this number was even higher.
After Bittner
The non-willful penalty applies per report, not per account. The same scenario now produces:
$16,536 (2025 adjusted max) × 3 years = $49,608 maximum
This is a 67% reduction in maximum exposure for a non-willful violator with 5 accounts.
The Statutory Language
The Court focused on 31 U.S.C. § 5321(a)(5)(A), which authorizes a civil penalty for:
"any violation of, or any failure to comply with, the reporting requirements"
The majority concluded that a "violation" is the failure to file a report—not the failure to report each account. Justice Gorsuch, writing for the majority, emphasized that the statute refers to the report (the FBAR), not to individual accounts.
What Bittner Does NOT Change
Willful Penalties
Bittner applies only to non-willful penalties. Willful FBAR penalties operate under a different statutory provision (31 U.S.C. § 5321(a)(5)(C)) and continue to apply per account, per year.
For willful violations:
- Greater of $165,353 (inflation-adjusted) or 50% of the account balance
- Per account, per year
- No Bittner protection
The $10,000 Base Amount
Bittner did not change the statutory base penalty amount of $10,000. What has changed is the interpretation of how that amount applies. The inflation-adjusted maximum remains the figure set by FinCEN under 31 CFR 1010.821.
Reasonable Cause Exception
Bittner did not alter the reasonable cause exception. FinCEN can still waive penalties if the taxpayer demonstrates reasonable cause for the failure to file.
Practical Impact for Expats
Multiple Accounts = Less Exposure
The biggest winners under Bittner are expats with many foreign accounts who missed filings non-willfully.
| Accounts | Years Unfiled | Pre-Bittner Max | Post-Bittner Max |
|---|---|---|---|
| 2 | 2 | $66,144 | $33,072 |
| 5 | 3 | $248,040 | $49,608 |
| 10 | 5 | $826,800 | $82,680 |
Single Account = Minimal Change
If you only have one foreign account, Bittner changes nothing. One unfiled FBAR with one account = one penalty either way.
Catch-Up Strategy Implications
Bittner makes certain catch-up paths more attractive:
- Streamlined Foreign Offshore Procedures: For non-willful non-filers, the reduced penalty exposure makes Streamlined more predictable.
- Late-filing review: If you have no unreported income, current IRS guidance says to file late FBARs as soon as possible and follow the current instructions for explaining the late filing; do not assume a penalty-free result without checking the facts.
- Voluntary Disclosure Practice: Still appropriate for willful cases, where Bittner does not help.
The Current Penalty Amounts (2026)
For civil penalties assessed on or after January 17, 2025, the inflation-adjusted maximums include:
| Violation Type | Maximum Penalty |
|---|---|
| Non-willful | $16,536 per unfiled FBAR, per year |
| Willful | Greater of $165,353 or 50% of account balance, per account, per year |
| Criminal | Up to $500,000 fine and 10 years imprisonment |
What "Non-Willful" Means
The distinction between willful and non-willful is fact-specific and often contested:
- Non-willful: Reckless disregard, negligence, or honest mistake. "I didn't know about the FBAR" can be non-willful if supported by the facts, but ignorance alone is not a guaranteed defense.
- Willful: Intentional violation or reckless disregard of a known duty. The government can prove willfulness through circumstantial evidence—consulting a tax advisor about foreign accounts, signing a tax return that mentions foreign accounts, or maintaining a pattern of non-compliance.
Critical: You cannot assume your conduct was non-willful. The IRS and FinCEN may disagree. Consult a qualified tax attorney if there is any doubt.
How FileAbroad Approaches Penalty Questions
FileAbroad prepares FBARs and screens catch-up work within a written scope. We do not provide legal opinions on willfulness, penalty defense, or representation before the IRS.
- Penalty exposure screening: We review your account count, years unfiled, and filing history to estimate penalty exposure under current law.
- Catch-up path recommendation: We explain the Streamlined Procedures, delinquent FBAR procedures, and when attorney review is recommended.
- Attorney referrals: When willfulness or high penalty exposure is a concern, we refer you to experienced tax counsel.
- Preparation scope: We prepare accepted current-year and late FBARs from the records and facts you provide.
For penalty questions or catch-up strategy, start with the FBAR scope review.
Official sources
Frequently Asked Questions
What did the Supreme Court decide in Bittner?
In United States v. Bittner (2023), the Supreme Court held that non-willful FBAR penalties apply per report, not per account. This means the maximum non-willful penalty for a single unfiled FBAR is capped at one penalty amount, regardless of how many accounts should have been reported on that FBAR. Before Bittner, the government argued for per-account penalties, which could multiply exposure dramatically.
Does Bittner affect willful FBAR penalties?
No. Bittner addressed only non-willful penalties. Willful FBAR penalties remain governed by a different statutory framework and continue to apply per account, per year. The willful penalty is the greater of $165,353 (inflation-adjusted for 2025) or 50% of the account balance at the time of the violation, and this is assessed per account.
What is the current non-willful FBAR penalty amount?
For civil penalties assessed on or after January 17, 2025, the inflation-adjusted maximum non-willful FBAR penalty is $16,536 per unfiled FBAR, per year. This amount is adjusted annually for inflation under 31 CFR 1010.821. The base statutory amount is $10,000, but inflation adjustments have raised it significantly.
How does Bittner affect my catch-up filing strategy?
Bittner significantly reduces penalty exposure for non-willful non-filers with multiple accounts. If you have 5 unreported foreign accounts and 3 years of missed FBARs, your maximum non-willful penalty exposure is $16,536 × 3 years = $49,608, not $16,536 × 5 accounts × 3 years. This makes the Streamlined Filing Procedures and delinquent FBAR submissions more attractive for non-willful cases with many accounts.
Can the IRS still assess less than the maximum penalty?
Yes. The $16,536 figure is an inflation-adjusted maximum for penalties assessed on or after January 17, 2025, not an automatic assessment. Actual penalty decisions depend on the applicable law and facts, including whether a reasonable-cause defense is available. A taxpayer should not assume that lack of awareness alone guarantees relief.
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About the Author
Chip Moreno helps Americans living abroad navigate U.S. tax obligations. Based in Ecuador, he understands the expat experience firsthand. See pricing or start your intake.
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