U.S. Supreme court overturns IRS fine given to Romanian businessman
The United States Supreme Court recently decided to overturn a USD 2.72 mln fine given by the Internal Revenue Service to a U.S.-Romanian businessman.
The court was split 5-4 as it sided with Alexandru Bittner, a dual U.S.-Romanian citizen who delayed filing reports to the IRS. The paperwork he had to submit was connected to the Bank Secrecy Act, which aims to combat money laundering and tax evasion by requiring U.S. citizens and residents to file reports disclosing their foreign bank accounts, according to Reuters.
Bittner said he only learned of the requirement to file the so-called FBAR reports after returning to the United States from Romania in 2011 and subsequently submitted five annual reports covering the years 2007 to 2011. The IRS, in turn, said that he had violated the law 272 times, not only 5 times, based on the number of accounts that were listed in his reports.
Non-willful violations of the law are subject to a maximum penalty of USD 10,000 per violation. Bittner argued he should only pay USD 50,000 for his belated filing, not USD 2.7 mln.
Bittner, who eventually disclosed USD 16 mln spread across 50 bank accounts in Romania, Switzerland, and Liechtenstein, said he should be penalized for just five violations
The New Orleans 5th U.S. Circuit Court agreed with the IRS, but the majority on the Supreme Court, led by conservative Justice Neil Gorsuch, sided with the businessman. "Best read, the BSA treats the failure to file a legally compliant report as one violation carrying a maximum penalty of USD 10,000, not a cascade of such penalties calculated on a per-account basis," Gorsuch wrote.
The dissenters came from across the court's ideological lines, with conservative Justices Amy Coney Barrett and Clarence Thomas joining with liberal Justices Sonia Sotomayor and Elena Kagan.
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