Breaking! Gird Your Loins for Greater FBAR Penalties! Supreme Court Denies Review in Toth/ Excessive Fines Issue

United States v. Toth:  Just yesterday, the United States Supreme Court denied review of Toth, a case being carefully followed by tax professionals who deal with FBAR cases, US persons abroad, and all things “foreign”. Toth was an FBAR “willful” penalty case on appeal to the First Circuit, with one of the issues being whether the civil willful FBAR penalty was subject to the US Constitution Eighth Amendment’s Excessive Fines Clause.  The First Circuit Court of Appeals held that the civil “willful” FBAR penalty is not subject to the Excessive Fines Clause since the IRS’s assessment against Ms. Toth was “not tied to any criminal sanction” and served a “remedial” (as opposed to a “punitive”) purpose.

Justice Gorsuch dissented on the Excessive Fines issue. Justice Gorsuch pointed to amici briefs that observed if the FBAR penalties were not subject to the Excessive Fines Clause, this “incentivizes governments to impose exorbitant civil penalties as a means of raising revenue”.  The purpose of the Excessive Fines Clause is to safeguard the taxpayer against abusive forfeiture actions; i.e., just what we are seeing in the FBAR cases…. What do you think?

I will blog on this case soon. Meanwhile have a listen to the podcast with attorney John Richardson, just done today.  We felt this is a very important development and a timely piece to get out there to readers ASAP.

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