With beefed up IRS, decision could affect Americans' tax burden

The Supreme Court on Wednesday heard arguments in a Romania-born U.S. citizen’s challenge of a more than $2 million IRS fine for not reporting his foreign accounts in a timely manner — a case that could impact individuals’ tax burden if the Biden administration fulfills its plan to beef up the agency.

“This should be an eye-opening case for a lot of people because it is a relatively in-the-weeds reporting requirement and yet we are seeing an untold amount of money that could end up coming out of this for what is largely a filing mistake,” said Nicholas Anthony, a policy analyst at the libertarian Cato Institute. “If we have the IRS personnel increased at the scale we are looking at … the IRS is going to look at this as a new renewed opportunity to find more funds.”

Wednesday’s case was brought by Alexandru Bittner, who immigrated to the United States in 1982 and eventually became a dual citizen. He returned to Romania from 1990 to 2011.

He was on the hook for a total of $2.72 million, and the feds took him to court.

Mr. Bittner’s lawyers argue that he should only be fined $50,000, reasoning that the federal law requires a fine of $10,000 per failure to file an annual report — not a fine of $10,000 per foreign account that was failed to be disclosed.

Daniel L. Geyser, who is representing Mr. Bittner, said a $10,000 fine for an average person who did not intend to violate the law “is a pretty substantial hit.”

“These are truly draconian punishments,” Mr. Geyser told the justices.

Matthew Guarnieri, who argued on behalf of the U.S. government, said suggesting the law requires only one fine would defeat Congress’ intent for the legislation, which was enacted to address the federal government’s concerns about individuals’ relationships with foreign banks.

“One account. One violation. One potential civil penalty,” Mr. Guarnieri said.

The Biden administration has allocated to the IRS $80 billion from the $740 billion Inflation Reduction Act. The agency plans to add personnel and resources to close the $600 billion annual deficit between the taxes it collects and the levies that are owed.

Dan Greenberg, general counsel at Competitive Enterprise Institute, suggested that employing significantly more IRS agents leads one to believe that other Americans could find themselves in Mr. Bittner’s shoes.

“Clearly, if you employ tens of thousands more IRS agents, you have to give them something to do, and it strikes me that enforcing regulations — even if they appear unclear to some people — is something they might do,” Mr. Greenberg said.

Read the full article on The Washington Times.