A Current “Playoff Picture” of Non-Willful FBAR Violations

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Zachary J. Montgomery

Zachary J. Montgomery



Zachary J. Montgomery is a dual-credentialed attorney and CPA. He practices in the area of federal and state tax litigation, white-collar defense, business and tax planning, and litigation. Mr. Montgomery has experience representing both businesses and individuals in federal tax controversies, including appeals, examinations, penalty abatement and collection matters. He has also represented taxpayers—from small organizations to Fortune 500 companies—with Texas franchise tax refund claims, audits, penalty abatement, and corporate structuring.

Mr. Montgomery is a graduate of the University of Virginia School of Law where he focused his studies on corporate and tax law and served on the editorial board of the Virginia Tax Review. Prior to joining the firm, he gained experience with PricewaterhouseCoopers, LLP, and a regional firm, focusing on federal and state tax controversies. His previous experience also includes Ernst & Young, Deloitte & Touche, and a judicial student clerkship with the First Court of Appeals of Texas.

Mr. Montgomery is a graduate of Texas A&M University, where he graduated Summa Cum Laude and received his B.B.A. with a double major in Accounting and Business Honors and his M.S. in Management Information Systems. While attending Texas A&M, he developed his business acumen, working as an enterprise risk consultant and financial analyst.

It’s that time of year again. Various football teams scramble at the end of the regular season for a chance at the playoffs. And with each game’s conclusion spectators get an updated “playoff picture” with respect to where each team stands. In that same spirit, as we begin 2022, it is helpful to see a “playoff picture” of the current legal landscape for FBAR violations, specifically non-willful violations. Certainly, football playoff games are more eventful than federal court decisions; however, such court decisions are no less impactful, particularly for those taxpayers with unreported foreign accounts.

FBARs, Generally

The Bank Secrecy Act, passed by Congress in 1970, authorized the Department of Treasury to collect certain information from U.S. persons who have financial interests in or signature authority over financial accounts maintained with financial institutions outside the United States. Further, in April 2003, the Financial Crimes and Enforcement Network (“FinCEN”) delegated its enforcement authority with respect to FBARs to the Internal Revenue Service.[1]

U.S. persons must file a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”), if the aggregate maximum values of the foreign financial accounts exceed $10,000 at any time during the calendar year. For purposes of FBAR reporting, a “U.S. person” includes a citizen or resident of the United States, an entity created or organized in the United States or under the laws of the United States (including corporations, partnerships, and limited liability companies), a trust formed under the laws of the United States, or an estate formed under the laws of the United States.[2]

31 U.S.C. § 5321

A U.S. person may be subject to certain civil and/or criminal penalties for FBAR reporting violations. 31 U.S.C. § 5321(a)(5) states, in part, as follows:

(5) Foreign financial agency transaction violation.—

(A) Penalty authorized.—

The 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.

(B) Amount of penalty.—

Except as provided in subparagraph (C), the amount of any civil penalty imposed under subparagraph (A) shall not exceed $10,000.[3]

Section 5321 also addresses penalties for willful violations, see 31 U.S.C. § 5321(a)(5)(C); however, this article is focused on the current landscape for non-willful violations and, specifically, what constitutes a violation.

Current FBAR Violations Map

FBAR Penalties


FBAR Penalties

FBAR Penalties

Breakdown of Major Court Decisions

The following federal cases addressed the issue (either directly or in dictum) of whether non-willful FBAR violations apply per FBAR filing or per foreign account. Each decision was issued in 2021 (save one), and the majority decisions occurred during the fourth quarter.


It is apparent that various federal courts have taken divergent views on the term “violation” with respect to Section 5321—whether it should apply only to each taxpayer’s FBAR filing or whether it should apply to any foreign account held by a taxpayer. The Boyd and Bittner decisions create a direct federal appellate split on the issue. Additionally, the Solomon case will provide the Eleventh Circuit the opportunity to provide input on this issue. Regardless, the legal landscape for FBARs (and non-willful violations) is still in flux and the subject of much discussion. Whether this issue is ultimately addressed by the U.S. Supreme Court or by a change in the laws by Congress remains to be seen. However, one thing is certain: taxpayers should be mindful of their FBAR obligations in this current environment.


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[1] See IRS FBAR Reference Guide, available at https://www.irs.gov/pub/irs-utl/irsfbarreferenceguide.pdf.

[2] Id.

[3] 31 U.S.C. § 5321(a)(5)(A)-(B)(i). It should also be noted that the penalties prescribed by this section are indexed for inflation. Further, the penalty described above is for non-willful violations.