Fifth Circuit Reverses FBAR Per-Account Penalty Judgment, Opens the Door to Steep Penalties, Dec. 30, 2021

The Fifth Circuit recently reversed the lower court ruling that each taxpayer could be subject to a single $10,000 penalty for non-willful FBAR reporting failures. Instead, the Fifth Circuit rule will provide that noncompliance penalties can be imposed on a per account, per form basis—rather than just a single "per form" penalty per year. In other words, taxpayers with multiple accounts can now be subject to a $10,000 penalty on each account, each year for noncompliance with FBAR reporting. This decision also conflicts with a Ninth Circuit opinion, which recently adopted the "per form" approach to limit each taxpayer's penalty liability each year. Clients in the Fifth Circuit should be advised of the potential for much steeper-than-anticipated penalties for FBAR reporting failures—even those of a non-willful nature—going forward. For more information on the FBAR reporting rules, see Q 1015.