Volume 30, Issue 6: This Report summarizes opinions issued on February 22 and 28, 2023 (Part I); and cases granted review on February 27 and March 6, 2023 (Part II).
Opinion: Bittner v. United States, 21-1195
Bittner v. United States, 21-1195. The Bank Secrecy Act (BSA) and its implementing regulations require certain individuals to file annual reports with the federal government about their foreign bank accounts. A single report might disclose the existence of multiple accounts. The statute imposes a maximum $10,000 penalty for nonwillful violations of the law. By a 5-4 vote, the Court held that the Act authorizes the $10,000 penalty on a per-report basis, not a per-account basis.
Petitioner Alexandru Bittner, a dual citizen of the United States and Romania, launched a successful business career while living in Romania. Upon returning to the United States, he learned that he had been required to report his foreign bank accounts to the U.S. government while living abroad. He then filed reports for the past five years and later corrected errors in those reports. The federal government assessed him a $10,000 fine for each account involved in the reports—a total of $2.72 million. Bittner challenged the fine, and the district court agreed that the fine should be assessed on a per-report, rather than a per-account, basis. The Fifth Circuit, however, reversed the district court’s judgment and upheld the federal government’s assessment. Meanwhile, in a separate case, the Ninth Circuit reached the opposite conclusion, holding that the BSA’s penalty applies on a per-report basis. United States v. Boyd, 991 F.3d 1077, 1078 (9th Cir. 2021). The Court granted certiorari in the Fifth Circuit case to resolve this conflict. In an opinion authored by Justice Gorsuch, the Court held that the BSA’s $10,000 penalty for nonwillful violations applies on a per-report, not a per-account, basis.
The Court started its analysis with the statutory text. In describing an individual’s legal duties under its terms, the BSA requires covered individuals to “file reports” but does not “speak of accounts or their number.” The duty to file reports is “binary”: an individual either files a report as required by statute or he does not. To be sure, this duty can be violated by committing one error or by committing multiple errors about multiple accounts in a single report. But either way, the statute is violated. The BSA then provides that the federal government may impose a civil penalty of up to $10,000 for “any violation” of its terms, including nonwillful violations. Again, the statute “does not speak of accounts or their number,” instead “peg[ging] the quantity of nonwillful penalties to the quantity of ‘violation[s].’” (Quoting 31 U.S.C. §§5321(a)(5)(A) and (B)(i)) (second alteration in original)). And because a violation occurs when an individual fails to file a report—regardless of the number of accounts involved—the statute is best read to impose a penalty on a per-report, not a per-account, basis.
In reaching this conclusion, the Court rejected the federal government’s invitation to construe the penalties for nonwillful violations analogously to penalties for willful violations. The Court explained that the provision governing civil penalties for willful violations, much like another BSA provision, expressly links penalties to accounts, showing that Congress “knew exactly how to” tie penalties to accounts but chose not to do so for nonwillful violations. Moreover, the Court’s reading was confirmed by other “contextual clues,” including the federal government’s administrative guidance, the statute’s drafting history and statement of purpose, and the implementing regulations. The Court, moreover, pointed out that the federal government’s statutory reading would produce incongruous results. As one example, an individual who willfully violates the BSA when reporting a $1 million account would face a maximum penalty of $100,000 for that one account, whereas an individual who nonwillfully violates the BSA for 20 accounts totaling $50,000 would face a maximum of $10,000 per account—up to $200,000 in total.
Justice Gorsuch added, in a section joined only by Justice Jackson, that any remaining doubt was best resolved by the rule of lenity, under which the Court construes statutes imposing penalties strictly against the government and in favor of individuals. Justice Gorsuch rejected the federal government’s efforts to limit this rule to construction of the Internal Revenue Code, and explained that the rule’s application here accords with due process guarantees of fair notice of proscribed conduct and accounts for the ramifications of the Court’s reading for criminal penalties authorized by the statute.
Justice Barrett dissented, joined by Justices Thomas, Sotomayor, and Kagan. She concluded that the “most natural reading of the statute” permits the federal government to collect penalties on a per-account basis. According to Justice Barrett, the reporting requirement is triggered by each individual account because the statute requires a citizen to “‘file reports’” whenever he “‘maintains a relation’”—colloquially understood as an account—with a foreign bank. (Quoting 31 U.S.C. §5314(a)). Because, she reasoned, “each relation is a matter of distinct concern under the statute, each failure to report an account violates the reporting requirement.” Justice Barrett also pointed to several other statutory provisions which, in her view, confirmed this reading, including a list of account-specific information required for each report and the civil penalty authorized for willful violations. The majority’s core error, she concluded, was that it conflated the annual form used to report information with the reports referred to in the statute. The implementing regulations demonstrate that the form is simply a procedural mechanism for complying with the statute and is thus irrelevant to the question of penalties, while the “statutorily required ‘report’” refers to a reporting of each foreign account. Thus, the penalties too are tied to each account.