Bittner v. United States/Opinion of Justice Barrett
SUPREME COURT OF THE UNITED STATES
No. 21–1195
ALEXANDRU BITTNER, PETITIONER v. UNITED STATES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
[February 28, 2023]
Justice Barrett, with whom Justice Thomas, Justice Sotomayor, and Justice Kagan join, dissenting.
Alexandru Bittner, an American citizen, held as much as $16 million across more than 50 bank accounts in Romania, Switzerland, and Liechtenstein.[1] He acknowledges that the Bank Secrecy Act (BSA) and its implementing regulations required him to report his interest in these accounts to the Federal Government annually. Bittner also admits that he failed to comply with that requirement for five consecutive years. Because he failed to report 272 accounts, the Government concluded that he violated the law 272 times and assessed a penalty for each violation. Bittner, on the other hand, argued that he violated the law just five times—once for each annual form that he failed to file.
The Court agrees with Bittner and holds that the failure to file a legally compliant form is a single violation, no matter how many accounts a citizen fails to report. I respectfully disagree. The most natural reading of the statute establishes that each failure to report a qualifying foreign account constitutes a separate reporting violation, so the Government can levy penalties on a per-account basis.
I
This case requires us to decide whether a violation of the BSA’s reporting requirement is the failure to file an annual form, or whether there is a separate violation for each individual account that is not properly reported. The answer lies in the text of the relevant statutes, 31 U. S. C. §§5314 and 5321. The Government assessed penalties against Bittner under §5321(a)(5)(A), which provides that “[t]he Secretary of the Treasury may impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314.” Section 5314, in turn, directs the Secretary to “require a … citizen of the United States … to keep records, file reports, or keep records and file reports, when the … person makes a transaction or maintains a relation for any person with a foreign financial agency.” §5314(a). The required “records and reports shall contain” certain information “in the way and to the extent the Secretary prescribes,” such as the identity, address, and legal capacity of the participants in a transaction or relationship. Ibid.
The text of §5314 indicates that its reporting requirement attaches to each individual account. Most notably, it provides that the Secretary “shall require” a citizen to “file reports” when he “maintains a relation … with a foreign financial agency.” Ibid. The subject matter of the required reports, then, is “a relation” with a foreign financial agency—or, more colloquially, an account with a foreign bank. Ibid. In other words, each relation with a foreign bank triggers the requirement to file reports. And because each relation is a matter of distinct concern under the statute, each failure to report an account violates the reporting requirement.
The enumerated list of information that the reports “shall contain” underscores the point. Ibid. That list includes information like “the identity and address of participants in a … relationship,” “the legal capacity in which a participant” in a relationship “is acting,” and “the identity of real parties in interest.” §§5314(a)(1)–(3). Each listed item is account specific because its contents can vary for each foreign account held. And each failure to report an account thus deprives the Government of the account-specific information that the statute requires.
That is not all. Section 5314 authorizes the Secretary to impose a recordkeeping requirement in addition to a reporting requirement. Recordkeeping violations cannot occur on a per-form basis because keeping records does not entail filing a form. Instead, they occur on a per-account basis because records naturally relate to specific accounts. And if violations of §5314’s recordkeeping obligation accrue on a per-account basis, the same should be true of violations of §5314’s obligation to file reports. The duties are parallel: Each kicks in “when” a citizen “maintains a relation” with a foreign financial agency, and each requires a person to collect the same account-specific information. §5314(a). Parallel duties should be susceptible to parallel violations.
The civil penalty provisions in §5321 confirm this reading of the substantive obligations imposed by §5314. Recall that §5321 allows the Secretary to “impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314.” §5321(a)(5)(A). The statute then proceeds to set the maximum penalty for nonwillful violations, provide a reasonable cause exception for those same violations, and set the maximum penalty for willful violations. §§5321(a)(5)(B)–(D). Throughout, Congress used the term “violation” in an account-specific way.
Consider the reasonable cause exception. It provides that “[n]o penalty shall be imposed … with respect to any” nonwillful “violation” of §5314 if (1) “such violation was due to reasonable cause” and (2) “the balance in the account at the time of the transaction was properly reported.” §5321(a)(5)(B)(ii) (emphasis added). By conditioning eligibility for the excuse on taking steps to report accurate information about a particular account, this language suggests that the underlying violation of §5314 is similarly tied to a specific account. After all, “if the exception for non-willful violations applies on a per-account basis, then logically the violations the exception forgives must arise on a per-account basis too.” 19 F. 4th 734, 747–748 (CA5 2021).
The willful penalty provisions sing the same tune. The maximum penalty for a willful violation is the greater of $100,000 or, “in the case of a violation involving a failure to report the existence of an account or any identifying information required to be provided with respect to an account,” 50 percent of “the balance in the account at the time of the violation.” §§5321(a)(5)(C)(i), (D)(ii). “This language makes clear that a violation may involve ‘a failure to report the existence of ’ ” a particular account. United States v. Boyd, 991 F. 3d 1077, 1089 (CA9 2021) (Ikuta, J., dissenting). By making the maximum penalty for a willful violation in some cases a function of “the balance in the account at the time of the violation,” the provision contemplates that discrete violations correspond to discrete accounts. §5321(a)(5)(D)(ii).
This pattern matters. The “normal rule of statutory interpretation” is that “identical words used in different parts of the same statute are generally presumed to have the same meaning.” IBP, Inc. v. Alvarez, 546 U. S. 21, 34 (2005). If a “violation” of §5314 has account-specific connotations in the reasonable cause and willful penalty provisions, it follows that a “violation” of §5314 has account-specific connotations when it comes to nonwillful penalties too.
The Secretary’s implementing regulations follow the BSA’s lead. They require regulated persons to report the existence of each foreign financial account to the Government each year. Start with 31 CFR §1010.350 (2011). It says that “[e]ach United States person having a financial interest in … a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner of Internal Revenue for each year in which such relationship exists and shall provide such information as shall be specified in a reporting form prescribed under 31 U. S. C. 5314 to be filed by such persons.” §1010.350(a) (emphasis added). The reporting form is known as an FBAR—a Report of Foreign Bank and Financial Accounts. Ibid. A separate regulation establishes the deadline for reporting these relationships. “Reports required to be filed by §1010.350 shall be filed” by “June 30 of each calendar year with respect to foreign financial accounts exceeding $10,000 maintained during the previous calendar year.” §1010.306(c), as amended, 81 Fed. Reg. 76864 (2016). Put together, these provisions impose a substantive obligation to report interests in foreign bank accounts each year in which those interests exist. See §1010.420 (referring to “accounts required by §1010.350 to be reported to the” Government).
Notably, the regulations distinguish between the form used to report accounts and the reports themselves. See §1010.306(d) (the “[r]eports required by” §1010.350 “shall be filed on forms prescribed by the Secretary” (emphasis added)); §1010.306(e) (the “[f]orms to be used in making the reports required by” §1010.350 “may be obtained from” the Government (emphasis added)). This underscores that FBAR forms are not themselves the “reports” required by the statute; rather, they are the procedural mechanism used to implement the duty to report each foreign account. This distinction tracks §5314, which emphasizes a citizen’s duty to file “reports” but nowhere mentions FBARs—or, for that matter, forms of any sort. §5314(a). So far as §5314 is concerned, the Secretary could have chosen a different mechanism to implement the statute. For instance, rather than instructing citizens to report all accounts on a single form, he could have instructed citizens to report each account on a separate form. And if the Secretary had taken that route, Bittner would be hard pressed to deny that he would have violated the statute 272 times by failing to file 272 forms. That difficulty illustrates Bittner’s fundamental misunderstanding of the account-specific obligation imposed by §5314, which is indifferent to the mechanism by which the obligation is discharged.
In the end, “the applicable statute and regulations make clear that any failure to report a foreign account is an independent violation, subject to independent penalties.” Boyd, 991 F. 3d, at 1089 (Ikuta, J., dissenting). A person who fails to report multiple foreign accounts on a single annual form violates the BSA and its implementing regulations multiple times, not just once. So the Government was within its rights to assess a separate penalty against Bittner for each qualifying foreign account that he failed to report properly.
II
A
The Court reads the relevant provisions differently. It reasons that the legal duty imposed by §5314 is “the duty to file reports.” Ante, at 5. In the Court’s view, that “statutory obligation is binary”: “Either one files a report ‘in the way and to the extent the Secretary prescribes,’ or one does not.” Ante, at 5–6. So penalties for nonwillful violations must “accrue on a per-report, not a per-account, basis.” Ante, at 6. And because Bittner failed to file timely FBARs for five years, the Court concludes that he violated the law only five times.
The Court’s core error is to conflate the reports referred to in §5314 with the annual FBAR form. To reiterate, the two are distinct. And because the FBAR is not itself the statutorily required “report,” the Court’s conclusion—that Bittner violated §5314 just five times because he untimely filed five FBAR forms—does not follow. The BSA and its implementing regulations required Bittner to file one report per year of each qualifying foreign financial account that he maintained. Each failure to report an account is a discrete violation regardless of whether the violations were clustered on a single form.
The Court does not just misread §5314; it misreads §5321 too. It points out that account-specific language is present in the reasonable cause and willful penalty provisions but absent in the provisions setting the nonwillful penalty. Because “Congress generally acts intentionally when it uses particular language in one section of a statute but omits it in another,” Department of Homeland Security v. MacLean, 574 U. S. 383, 391 (2015), the Court takes the contrast as evidence that nonwillful penalties cannot apply on a per-account basis. Ante, at 6–8 (invoking the expressio unius canon).
Not so. The expressio unius canon is a general rule, inapplicable where context suggests otherwise—as it does here. Congress capped the penalty for a nonwillful violation at a flat $10,000. §5321(a)(5)(B)(i). Because the penalty amount does not depend on the balance in an account, Congress had no reason to use account-specific language. By contrast, the maximum penalty for a willful violation is the greater of $100,000 or 50 percent of the account balance at the time of the violation, and the reasonable cause exception lifts a penalty only if the account balance was properly reported. §§5321(a)(5)(B)(ii), (C)(i), (D)(ii). Because the application of both provisions depends on the account balance, Congress needed to use account-specific language. The reason why Congress included account-specific language in only two of these three provisions is therefore readily apparent. Regardless, the variation in language does not do much for the Court. These provisions in §5321 explain the varying penalties that the Secretary may assess for a violation of §5314 but do not alter the nature of the underlying conduct that constitutes a violation. Boyd, 991 F. 3d, at 1089 (Ikuta, J., dissenting). That conduct, as discussed, is account specific.
B
The Court also invokes a handful of “contextual clues” to support its conclusion. Ante, at 9. None of these “clues” justifies a departure from the best reading of the text.
Begin with the Government’s guidance to the public about what the BSA requires. The Court identifies a handful of statements, primarily from Internal Revenue Service (IRS) fact sheets and form instructions, indicating that a failure to file an annual FBAR may result in a penalty of up to $10,000. The Court acknowledges that these materials do not control the analysis, yet it still goes on to suggest that they cut against the Government’s interpretation. Ante, at 9–10.
I am surprised that the Court is moved by this administrative guidance. For one thing, even Bittner concedes that the materials do not speak directly to the question presented in this case: whether additional penalties may accrue when a person fails to report multiple accounts on a single form. Reply Brief 18; Tr. of Oral Arg. 39–40. For another, the Court neglects to mention administrative materials that endorse the Government’s per-account interpretation. See, e.g., Brief for American College of Tax Counsel as Amicus Curiae 18, 21 (identifying IRS staff guidance materials from 2008 and 2015 explaining that FBAR penalties may be assessed per account). But in any event, guidance materials add little, if anything, to the interpretive enterprise when the traditional tools of construction supply an answer.
The Court also highlights the Secretary’s regulatory decision to allow the rare covered person with 25 or more foreign financial accounts to “only provide the number of financial accounts and certain other basic information on the report.” §1010.350(g)(1). According to the Court, this special rule is a knock against the Government’s reading because it does not require detailed account-level information in such a filer’s initial report. Ante, at 12.
But the Secretary’s accommodation does not advance the Court’s cause. A person with 25 or more accounts still “will be required to provide detailed information concerning each account when so requested by the Secretary or his delegate.” §1010.350(g)(1). And the Secretary’s recordkeeping regulation requires covered persons to retain the same detailed information about each account that otherwise would be reported on the annual form. See §1010.420. So a person with 25 or more accounts violates the BSA for each account with a reporting or recordkeeping problem just the same as a person with fewer than 25 accounts. In both cases, the violation is the failure to report the account properly or to keep records of it.
That consequence is consistent with the statute’s purpose. In arguing otherwise, the Court leans on what the preamble does not say: “[T]hat Congress sought to maximize penalties for every nonwillful mistake.” Ante, at 11. Notably, though, the Court skims over what the preamble does say: that the BSA is designed to “require certain reports or records” that assist the Government in “criminal, tax, or regulatory investigations” and in “intelligence or counterintelligence activities, including analysis, to protect against terrorism.” 31 U. S. C. §5311. When analyzing complex webs of money laundering or funding for international terrorism, knowing about every account matters—and lacking information about 15 accounts is certainly more harmful to law enforcement than lacking information about 1 account. See Brief for United States 38. Given the stated purpose, authorizing a penalty for each undisclosed account makes sense.
Finally, the Court insists that a per-account reading leads to absurd results. Its concerns range from the overstated to the incorrect, and they are in any event of limited relevance to the statutory interpretation question before us.
First, the Court posits a comparison between a person who nonwillfully violates the law once by failing to report a single account with a balance of $10 million and a person who nonwillfully violates the law 12 times by failing to report 12 accounts with an aggregate balance of $10,001. Because the first is subject to a maximum penalty of $10,000 and the second is subject to a maximum penalty of $120,000, the Court concludes that there is an “incongruity” in the statutory scheme. Ante, at 13. But a person who violates the law many times might naturally pay a steeper price than a person who violates the law just once, regardless of the balances in their unreported accounts. Indeed, the Court seems untroubled by the incongruity that flows from its own reading: The Secretary is constrained by the same maximum penalty ($10,000) for a person who nonwillfully fails to report 100 accounts on an annual FBAR as he is for a person who nonwillfully fails to report just 1 account. The per-form reading makes it difficult for the Government to assess stiffer penalties for more serious noncompliance.
Consider next the Court’s claim that, on the Government’s reading, those who willfully violate the law may face lower penalties than those who nonwillfully violate the law. Ibid. The Court provides the example of a person who holds $1 million in a foreign account during the course of a year but withdraws those funds before the filing deadline and willfully fails to report the account. Under §5321(a)(5)(C), that person faces a maximum penalty of $100,000, while a person who nonwillfully fails to report 20 accounts with an aggregate account balance of $50,000 might face a penalty of up to $200,000 under §5321(a)(5)(B)(i). This is not an apples-to-apples comparison: The first person willfully violated the law once, while the second nonwillfully violated the law 20 times. That the latter might face a higher penalty than the former is therefore beside the point. An actual apples-to-apples comparison shows that willful violators do face a much heavier fine: The maximum penalty for a single willful violation will always be at least 10 times greater than the maximum penalty for a single nonwillful violation. See §§5321(a)(5)(B)(i), (C)(i).
III
There is no denying that the Government opted to pursue a substantial penalty in this case: $10,000 for each of Bittner’s 272 alleged violations, for a total penalty of $2.72 million. Yet while the statutory scheme allows for substantial penalties, it also offers a safe haven. No penalty shall be imposed for a nonwillful violation of §5314 if (1) “such violation was due to reasonable cause” and (2) “the balance in the account at the time of the transaction was properly reported.” §5321(a)(5)(B)(ii).
Bittner raised this defense below, and the Government conceded that he satisfied its second prong by properly reporting the balances in his accounts on his late-filed FBARs. 19 F. 4th, at 740, and n. 2. But the District Court and Court of Appeals both roundly rejected Bittner’s argument that he had reasonable cause for failing to timely report his accounts. After evaluating the pertinent facts and circumstances, both courts concluded that Bittner “did not exercise ordinary business care and prudence in failing to fulfill his reporting obligations.” Id., at 742; see also 469 F. Supp. 3d 709, 729 (ED Tex. 2020). On the contrary, Bittner “put no effort into ascertaining” those obligations despite operating as a sophisticated business professional who held “interests in dozens of companies, negotiated purchases of Romanian government assets, transferred his assets into holding companies, and concealed his earnings in ‘numbered accounts.’ ” 19 F. 4th, at 742. Bittner abandoned his reasonable cause argument when he came to this Court, so we have no occasion to consider its merit. Brief for Petitioner 11, n. 9. But the defense is available to litigants who can satisfy it. *** The most natural reading of the BSA and its implementing regulations establishes that a person who fails to report multiple accounts on the prescribed reporting form violates the law multiple times, not just once. Because the Court declines to adopt that reading, I respectfully dissent.
- ↑ In 2007, for example, he held over $10 million across 61 foreign bank accounts. The pattern continued: $10 million across 51 accounts in 2008, $3 million across 53 accounts in 2009, $16 million across 53 accounts in 2010, and $15 million across 54 accounts in 2011.