Nonwillful FBAR penalties apply per report, not per account
The Supreme Court, in a 5–4 decision, held that the penalty under Section 5321 of the Bank Secrecy Act (BSA) for a nonwillful violation of the reporting requirements for foreign accounts under Section 5314 of the BSA applies on a per-report, not a per-account, basis.
Although Sec. 5321 does not explicitly state that the nonwillful penalty applies on a per-account basis, the IRS noted in Section 5321(a)(5)(D)(ii) the penalty for willful violations of Section 5314 was tied to the number of accounts that a person had not disclosed or for which the person had not provided the required information in a report. Thus, the government argued that it should be inferred that Congress intended that the penalty should also apply per account for analogous nonwillful violations.
However, the Court found that the government’s interpretation defied the traditional rule of statutory construction that when Congress includes particular language in one section of a statute and omits it from a neighbor, the Court normally understands that the difference in language conveys a difference in meaning. Here, the Court found that Section 5321 twice showed that when Congress wished to determine the penalties according to account-level information, it knew exactly how to do so. In Sections 5321(a)(5)(C) and (D)(ii), Congress stated that penalties for certain willful violations may be measured on a peraccount basis. Also, in Section 5321(a) (5) (B)(ii), it stated that a person may invoke the reasonable-cause exception only on a showing of per-account accuracy.