The Excessive Fines Clause Comes for the FBAR Civil Penalty

September 19, 2024  |  New York Law Journal

Taxpayers who willfully fail to disclose their offshore account holdings on Reports of Foreign Bank and Financial Accounts (FBARs) face financial penalties of up to $100,000, or 50% of the balance of unreported accounts. Late last month, in United States v. Schwarzbaum, the United States Court of Appeals for the Eleventh Circuit applied the Eighth Amendment’s Excessive Fines Clause and found that willful FBAR penalties imposed on one taxpayer were unconstitutionally excessive. In doing so, the court disagreed the First Circuit's earlier ruling in United States v. Toth and became the first Court of Appeals to hold that the willful FBAR penalties were subject to the Eighth Amendment’s limitations. In his latest article for the NYLJ, “The Excessive Fines Clause Comes for the FBAR Civil Penalty,” Morvillo Abramowitz Grand Iason & Anello partner Jeremy H. Temkin reviews the split between Toth and Schwarzbaum and discusses the implications of Schwarzbaum.

The Excessive Fines Clause Comes for the FBAR Civil Penalty (pdf | 123.80 KB)