FBAR Ruling Creates Circuit Split Over Excessive Fines Clause

The excessive fines clause of the US Constitution’s Eighth Amendment applies to penalties levied for failure to report foreign bank accounts, the Eleventh Circuit said, creating a split with the only other federal appeals court to rule on the question.

The Atlanta-based appellate court upheld $12.3 million in penalties against Isac Schwarzbaum, a German-born naturalized US citizen with extensive wealth in Switzerland and Costa Rica who failed to report his foreign bank accounts to the IRS for 2007 to 2009.

But the US Court of Appeals for the Eleventh Circuit also cut $300,000 of additional fines, which it said were ...