The short version

If you are an American abroad with years of unfiled foreign bank account reports, you have probably heard a frightening number. The fear goes like this: the penalty for a missed report is per account, so if you held ten foreign accounts across five years, the government can stack the penalty fifty times over. For a long time the IRS argued exactly that, and in some courts it won. In 2023 the Supreme Court said no.

In Bittner v. United States, the Court held that the non-willful penalty for a Report of Foreign Bank and Financial Accounts (the FBAR) applies per report, that is, per annual form you failed to file, not per account listed on it. For one taxpayer in that very case, the difference was the difference between a catastrophic number and a survivable one: a penalty the government had assessed at 2.72 million dollars dropped to 50,000 dollars. This article walks the case in plain English, then explains what it does and does not do for someone coming into compliance now. The short answer: Bittner bounded the downside for honest mistakes. It did not bless silence, and it did not touch the willful penalty, which is far larger.

What the law actually says (primary authority first)

The case is Bittner v. United States, 598 U.S. 274 (2023), decided February 28, 2023.

The facts are the kind of fact pattern this whole series is about. The taxpayer was a dual citizen who lived abroad for years and held interests in many foreign financial accounts. He did not file FBARs during that period. When he learned of the requirement, he filed. Nobody alleged he was hiding anything; the violations were treated as non-willful, the honest-mistake category. The dispute was not about whether he owed a penalty. It was about how to count it.

That counting question had split the courts of appeals. The reporting duty for the FBAR is triggered when your foreign accounts in aggregate exceed 10,000 dollars at any time in the year, a single annual filing that lists every account. One line of cases read the statute the way the government wanted, penalty per account, so a single late form covering a dozen accounts meant a dozen penalties. The other line read it as one penalty per form. The Fifth Circuit had sided with the government against Bittner; another circuit had read it the other way. The Supreme Court took the case to settle it.

The Court settled it for the taxpayer. The holding, in the Court’s own words, is that penalties for non-willful violations “accrue on a per-report, not a per-account, basis.” One annual FBAR that you failed to file, however many accounts it should have listed, is one non-willful violation. The decision was 5 to 4, and Justice Gorsuch wrote for the Court.

Two boundaries on the holding matter enormously, and missing either of them is how people get hurt.

First, Bittner is a non-willful case about non-willful penalties. The Court was construing the penalty for the honest-mistake category. It did not reduce, soften, or address the penalty for willful conduct. Under 31 U.S.C. 5321(a)(5), a willful FBAR violation can be penalized at the greater of 100,000 dollars or 50 percent of the balance in the account at the time of the violation. Fifty percent of the account balance, per violation, is a different universe of risk, and Bittner left it standing untouched.

Second, Bittner did not say the FBAR does not matter, or that you can let unfiled forms sit. It said that if you have non-willful violations, the meter runs per form rather than per account. That is a ceiling on the downside, not permission to stay silent. The penalty still exists, eligibility for the favorable compliance programs is still lost once the IRS opens an examination, and silence still carries its own risks. What changed is the size of the worst case for an honest filer, not the wisdom of coming forward.

How it works in practice

Numbers make this concrete, so walk through the arithmetic Bittner reversed.

Picture a US citizen who lived abroad and, like the taxpayer in the case, held interests in a dozen foreign accounts: a couple of checking accounts, some savings, a brokerage account, a few accounts tied to local life. Suppose she failed to file FBARs for five years. None of it was hidden; she simply did not know the rule existed for Americans overseas. These are non-willful violations.

Under the per-account theory the government pressed, you count every account on every missed form. Twelve accounts across five years is sixty account-years, and at a 10,000 dollar non-willful penalty each, the exposure climbs toward 600,000 dollars from paperwork alone, with no allegation of hiding a dime and quite possibly no US tax actually owed. In Bittner’s real case, run on his real account count and years, the government’s per-account math produced an assessment of 2.72 million dollars. That is the number that makes people freeze and do nothing, which is the worst possible response.

Now apply the holding. The penalty attaches to the report, not the accounts on it. Five missed annual forms is five non-willful violations. In Bittner’s own case, that recount took the 2.72 million dollar assessment down to 50,000 dollars. Same taxpayer, same accounts, same years; the only thing that changed was counting per form instead of per account. The catastrophic figure became a survivable one.

Here is the part that matters for what you do next. The cleanest way for most non-willful filers abroad to resolve old FBARs is not to litigate the count at all. It is to come into compliance through the Streamlined Filing Compliance Procedures, the IRS on-ramp built for taxpayers whose failure to file was non-willful. The IRS defines non-willful conduct there as “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.” For a taxpayer who qualifies for the foreign track, the Streamlined Foreign Offshore Procedures ask for the most recent 3 years of returns and the most recent 6 years of FBARs, with no miscellaneous offshore penalty. In other words, the program designed for the honest filer can take that already-reduced per-report exposure and, when you qualify, bring it to zero offshore penalty. Bittner sets the ceiling if a non-willful case is ever penalized on its own; the streamlined foreign track is the door most people should be walking through instead.

One warning has to be stated plainly, because it is where the real danger lives now. The reason the willful penalty stays so large is to keep the line meaningful. Certifying that your conduct was non-willful when it was not, in order to claim Bittner’s gentler math or the streamlined program’s penalty relief, is a false statement made under penalty of perjury. It does not make a willful case disappear; it stacks a fresh and more serious problem on top of the original one. Bittner helps the honest filer. It does nothing for someone who tries to dress a willful case in non-willful clothes, and the willful penalty in 31 U.S.C. 5321 is exactly why that gamble is a bad one.

The numbers

This first table is the before-and-after the case turned on. The figures are Bittner’s own, as the assessment the government sought and the amount after the Court’s per-report holding.

FBAR exposure, illustrative non-willful filer	Per-account theory (rejected)	Per-report holding (Bittner)
How the penalty is counted	Once per account, per year	Once per annual report
Bittner’s assessment as litigated	2,720,000 USD	50,000 USD
What changed between the two columns	Nothing but the counting method	Nothing but the counting method

This second table sets the non-willful penalty that Bittner addressed beside the willful penalty that it did not, which is the distinction that controls how large a case can get.

Item	Figure	Source (year)
Non-willful FBAR penalty applies	Per report, not per account	Bittner v. United States, 598 U.S. 274 (2023)
Bittner: decided / vote / author	February 28, 2023 / 5 to 4 / Justice Gorsuch	Bittner v. United States, 598 U.S. 274 (2023)
Non-willful FBAR exposure in Bittner	Reduced from 2.72 million to 50,000 USD	Bittner v. United States, 598 U.S. 274 (2023)
Willful FBAR penalty (untouched by Bittner)	Greater of 100,000 USD or 50 percent of the account balance	31 U.S.C. 5321(a)(5)
FBAR filing threshold	Aggregate foreign accounts over 10,000 USD at any time in the year	IRS, Report of Foreign Bank and Financial Accounts (2026)
Streamlined Foreign Offshore: returns / FBARs / penalty	3 years / 6 years / no miscellaneous offshore penalty	IRS, Streamlined Foreign Offshore Procedures (2026)

What this means for you

A few practical points.

First, the headline number you may have heard is probably the per-account number, and after Bittner that is not the law. If someone quoted you a six- or seven-figure FBAR exposure built by multiplying accounts across years, that math is the theory the Supreme Court rejected for non-willful violations. The honest worst case for a non-willful filer is measured per annual form, which is a far smaller figure. Do not let the old number scare you into silence.

Second, Bittner is a ceiling, not a plan. It tells you how bad a non-willful case can get if it is ever penalized on its own terms. It does not get your old forms filed, and it does not give you the program-level relief that the streamlined foreign track does. For most non-willful Americans abroad, the move is not to wait and litigate the count; it is to come current through the streamlined foreign procedures, where qualifying gets you to no offshore penalty rather than to a reduced one.

Third, the willfulness line is doing real work, and standing on the wrong side of it is the one mistake Bittner cannot fix. The reason the willful penalty is the greater of 100,000 dollars or half the account balance is to keep the non-willful category honest. If your conduct really was an honest mistake, Bittner and the streamlined program are built for you. If it was not, the answer is the proper willful path, not a false certification, because swearing to non-willful conduct you did not have only adds a perjury problem to a penalty problem.

Every case turns on its own facts, and I do not promise specific outcomes. What I can do is read your facts honestly, tell you whether you are in the non-willful category Bittner and the streamlined program are designed for, and lay out the path that actually fits.

How Sheepdog Tax Resolution can help

I am a CPA and Certified Fraud Examiner, and this is a veteran-owned practice. If you have unfiled FBARs and you have been carrying a frightening per-account number in your head, the first step is a straightforward read of your facts: whether your conduct fits the non-willful category that Bittner and the streamlined foreign track are built for, how many annual reports are actually at issue, and which path brings you current with the smallest defensible exposure. That diagnostic is how the work starts, before anything is filed.

Every case turns on its own facts, and I do not promise specific outcomes. What I offer is an honest reading of where you stand and a clear plan to get current. To start the review, reach me at noah@sheepdogtax.com.

Sources (primary authority first, then secondary commentary)

Bittner v. United States, 598 U.S. 274 (2023) (non-willful FBAR penalty applies per report, not per account). https://www.law.cornell.edu/supremecourt/text/21-1195
31 U.S.C. 5321 (FBAR civil penalties; willful penalty is the greater of 100,000 USD or 50 percent of the account balance). https://www.law.cornell.edu/uscode/text/31/5321
IRS, Report of Foreign Bank and Financial Accounts (FBAR) (10,000 USD aggregate filing threshold). https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
IRS, Streamlined Filing Compliance Procedures (program hub; non-willful definition). https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures
IRS, U.S. Taxpayers Residing Outside the United States (Streamlined Foreign Offshore Procedures; 3 years of returns, 6 years of FBARs, no offshore penalty). https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states
IRS, Criminal Investigation Voluntary Disclosure Practice (Form 14457; willful path). https://www.irs.gov/compliance/criminal-investigation/irs-criminal-investigation-voluntary-disclosure-practice

Prepared by Noah Green, CPA, CFE.

Bittner Changed FBAR Math: What One Supreme Court Case Means