United States v. Boyd

991 F.3d 1077

UNITED STATES of America, Plaintiff-Appellee,

v.Jane BOYD, Defendant-Appellant.

No. 19-55585

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 1, 2020 Pasadena, California

Filed March 24, 2021

BENNETT, Circuit Judge:

Defendant Jane Boyd did not timely file a Report of Foreign Bank and Financial Accounts form ("FBAR") disclosing her foreign financial accounts in the United Kingdom.¹ The Internal Revenue Service ("IRS") found that she violated the reporting requirements of 31 U.S.C. § 5314 and imposed multiple penalties under 31 U.S.C. § 5321(a)(5)(A) based on her belated submission of a single FBAR. The government sued in the district court seeking to obtain a judgment against Boyd in the amount of $47,279, plus additional late-payment penalties and interest for non-willful violations. The parties cross moved for summary judgment. The district court granted the government's motion, concluding that § 5321(a)(5)(A) authorized the government to impose multiple non-willful penalties—up to $10,000 for each foreign bank account that was required to be listed on the FBAR. We reverse this judgment and conclude that § 5321(a)(5)(A) authorizes the IRS to impose only one non-willful penalty when an untimely, but accurate, FBAR is filed, no matter the number of accounts.

I.

The relevant facts are undisputed. Jane Boyd, an American citizen, had a financial interest in fourteen financial accounts in the United Kingdom with an aggregate balance in excess of $10,000. The amounts in these accounts significantly increased between 2009 and 2011 after her father died in 2009 and she deposited her inheritance. Boyd received interest and dividends from these accounts and did not report the interest and dividends on her 2010 federal income tax return or disclose the accounts to the IRS. In 2012, Boyd asked to participate in the IRS's Offshore Voluntary Disclosure Program—a program that allows taxpayers to voluntarily report undisclosed offshore financial accounts in exchange for predictable and uniform penalties. After the IRS accepted Boyd into the program, she submitted, in October 2012, an FBAR listing her fourteen foreign accounts for 2010 and amended her 2010 tax return to include the interest and dividends from these accounts.

Boyd was granted permission by the IRS to opt out of the program in 2014. The IRS then examined Boyd's income tax return and concluded that she committed thirteen FBAR violations—one violation for each account she failed to timely report for calendar year 2010.² The late-submitted FBAR was complete and accurate. The IRS concluded that Boyd's violations were non-willful, and it assessed a total penalty of $47,279. In 2018, the government sued Boyd seeking to obtain a judgment against her for the $47,279 plus additional late-payment penalties and interest.

Boyd argued before the district court that she had committed only one non-willful violation, not thirteen, and that the maximum penalty allowed by the statute for that single non-willful violation was $10,000. The government contended that the relevant statutes and regulations authorized the IRS to assess one penalty for each non-reported account. The district court agreed with the government. Boyd timely appealed.

We have jurisdiction under 28 U.S.C. § 1291.

II.

This case presents an issue of first impression for this court. We must decide whether 31 U.S.C. § 5321 authorizes the IRS to impose multiple non-willful penalties for the untimely filing of a single accurate FBAR that includes multiple foreign accounts.

Boyd argues that the statutory language does not support a separate penalty for each account she should have listed on the FBAR she failed to timely file. Rather, according to Boyd, the statutory and regulatory schemes provide that a non-willful, untimely but accurate FBAR filing constitutes a single violation subject to a maximum penalty of $10,000. Boyd also contends that the rule of lenity applies to statutes imposing penalties and, therefore, § 5321 should be construed strictly against the government.

The government argues that multiple non-willful violations may spring from a single late but accurate FBAR, because 31 U.S.C. § 5314 and its implementing regulations create reporting requirements that extend to each foreign account. In the government's view, Boyd's reading of § 5321 is incompatible with the statutory scheme as a whole, particularly when viewing the statute's "reasonable cause" exception and willful penalty provisions, both of which, the government claims, are directed to accounts and not the FBAR form.

We agree with Boyd. The statute, read with the regulations, authorizes a single non-willful penalty for the failure to file a timely FBAR. Accordingly, we reverse the district court and remand for further proceedings consistent with this opinion.

A.

We review de novo both the "district court's grant of summary judgment," Bradley v. United States , 817 F.2d 1400, 1402 (9th Cir. 1987), and its interpretation of the statute, see United States v. Town of Colo. City , 935 F.3d 804, 807 (9th Cir. 2019). Summary judgment here is appropriate if there is "no genuine dispute as to any material fact and the [government] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When we interpret a statute, our "first step ... is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co. , 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). If so, the "inquiry must cease," provided "the statutory scheme is coherent and consistent." Id. (quoting United States v. Ron Pair Enters., Inc. , 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) ). We determine "[t]he plainness or ambiguity of [the] statutory language ... by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id. at 341, 117 S.Ct. 843 ; see also Util. Air Regul. Grp. v. EPA , 573 U.S. 302, 320, 134 S.Ct. 2427, 189 L.Ed.2d 372 (2014) (noting that it is a "fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme" (quoting FDA v. Brown & Williamson Tobacco Corp ., 529 U.S. 120, 133, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) )). Thus, in addition to looking at the statutory text, we analyze the statutory and regulatory framework as a whole and examine the meaning of the statutory provisions "with a view to their place" in that framework. Util. Air Regul. Grp. , 573 U.S. at 320, 134 S.Ct. 2427.

B.

Section 5321 authorizes the government to "impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314." 31 U.S.C. § 5321(a)(5)(A). Section 5321 establishes two types of civil penalties depending on whether the violation was willful or non-willful. See id. § 5321(a)(5). The maximum penalty for a non-willful violation "shall not exceed $10,000." Id. § 5321(a)(5)(B)(i).³ The maximum penalty for willful violations is the greater of $100,000 or "50 percent of the amount determined under subparagraph (D)." Id. § 5321(a)(5)(C). Subparagraph (D) provides that for "a violation involving a transaction," the relevant amount is "the amount of the transaction," id. § 5321(a)(5)(D)(i), while for "a violation involving a failure to report the existence of an account or any identifying information required to be provided with respect to an account," the relevant amount is "the balance in the account at the time of the violation," id. § 5321(a)(5)(D)(ii). The statute thus penalizes willful violations involving misreporting or non-reporting of account information up to the greater of 50 percent of the account balance, or $100,000.⁴

The salient question is: Did Boyd commit one non-willful violation for her single failure to timely file the FBAR, or did she commit thirteen (or fourteen) non-willful violations for her single failure to timely file an FBAR listing her fourteen relevant accounts? We turn to the applicable statutes and implementing regulations to answer this question.

Section 5321(a)(5)(A) provides for imposition of "a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314." Congress did not define "provision." We therefore apply the ordinary and plain meaning of that word. See Metro One Telecomms., Inc. v. Comm'r , 704 F.3d 1057, 1061 (9th Cir. 2012) ("[I]n the absence of an indication to the contrary, words in a statute are assumed to bear their ordinary, contemporary, common meaning." (quoting Walters v. Metro. Educ. Enters., Inc. , 519 U.S. 202, 207, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997) )). A provision is "an article or clause (as in a contract) that introduces a condition" or "a condition, requirement, or item specified in a legal instrument." Provision , Merriam-Webster.com, https://www.merriam-webster.com/dictionary/provision (last visited Nov. 9, 2020) (defining provision as "proviso" or "stipulation").⁵

Section 5314 contains several provisions, including:

(a) Considering the need to avoid impeding or controlling the export or import of monetary instruments and the need to avoid burdening unreasonably a person making a transaction with a foreign financial agency, the Secretary of the Treasury shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records, file reports , or keep records and file reports, when the resident, citizen , or person makes a transaction or maintains a relation for any person with a foreign financial agency . The records and reports shall contain the following information in the way and to the extent the Secretary prescribes:

(1) the identity and address of participants in a transaction or relationship.

(2) the legal capacity in which a participant is acting.

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