FBAR Case Law
Court decisions set how the FBAR penalties apply in practice. Two decisions matter most for US persons with Indian accounts: the Supreme Court's 2023 ruling on how non-willful penalties are counted, and a 2026 Second Circuit decision on how willfulness is defined. Each summary below is a short guide to the holding. Read the full opinion before relying on it.
Key decisions
| Case | Court and date | Holding | Why it matters for Indian accounts |
|---|---|---|---|
| Bittner v. United States | US Supreme Court, February 28, 2023 | The non-willful FBAR penalty of $10,000 is assessed for each report that must be filed, not for each account listed on the report. | Non-willful failures for a year with several Indian accounts are counted once per report, not per account. This significantly reduced exposure for many filers. |
| United States v. Reyes | US Court of Appeals for the Second Circuit, January 7, 2026 | "Willfully" in the FBAR penalty statute covers both intentional and reckless failures to file. Recklessness is judged objectively, by whether the risk was so obvious it should have been known. | A filer who holds a large share of wealth abroad, and who did not act on warning signs such as an unanswered question from an accountant, may be found reckless even without intent. Willful penalties can be much larger. |
Bittner: what changed
Before Bittner, the non-willful penalty was applied per account, which could produce very large totals for filers with many accounts. The Supreme Court held that the penalty applies per report. The Court's ruling covers non-willful violations only. Willful violations still carry larger penalties. Filers who paid per-account penalties may be able to seek refunds, so it is worth reviewing older assessments.
Reyes: how recklessness is judged
In Reyes, the court affirmed penalty assessments of $420,051 against each defendant, after the IRS set the penalty below the statutory maximum of 50% of the account balance and reduced it on appeal. The court also held that a six percent late payment penalty on unpaid assessments was mandatory. The facts the court relied on included a large share of wealth held abroad, foreign-card spending, mail and investment instructions sent abroad, and an accountant's question that went unanswered. The key lesson for Indian account holders is that warning signs matter, and that a belief of no reporting duty does not automatically protect a filer.
Other areas to research
- Cases on foreign trusts and Form 3520 penalties, which apply separately from FBAR penalties.
- Cases on PFIC reporting and the Form 8621 statute of limitations.
- Cases on the willfulness standard in tax and FBAR matters in other circuits. Circuit courts differ, and the standard can depend on where a case is heard.
How to use this page
Court decisions change the penalty analysis for past years and sometimes for current filings. Before a correction or a settlement, have the decisions reviewed against your facts. See our enforcement page for how penalties are assessed, and consultation for a review.
These case summaries are general educational information and simplify complex decisions. They are not legal advice and may not apply to your situation. Read the full opinions and consult a qualified attorney or tax professional before acting.