FBAR Penalties After Bittner: What the Supreme Court Decision Means for Expats

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.

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:

1. Streamlined Foreign Offshore Procedures: For non-willful non-filers, the reduced penalty exposure makes Streamlined more predictable.
2. 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.
3. 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:

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

• Supreme Court opinion in Bittner v. United States
• 31 CFR 1010.821 penalty adjustment table
• IRS FBAR filing and late-filing guidance
• FinCEN purpose of the FBAR
• FinCEN reporting maximum account value