Bittner v. United States

Bittner v. United States was a 2023 United States Supreme Court decision involving the rule of lenity. It is more notable for the unusual split decision where both liberal- and conservative-leaning Justices were on both sides of the ruling.

Background

Under Federal tax law, any United States citizen who holds any bank account in a foreign country, must annually report these holdings. This applies regardless of whether the citizen resides in the United States or outside it. All foreign accounts are reported on a single report. The penalties for failure to report, or reporting incorrectly, depend on whether the failure was or was not willful (willful breaches result in harsher penalties and can include criminal prosecution).

The Case

Alexandru Bittner, a Romanian national, originally immigrated to the United States in the 1980's, where he became a citizen. In the 1990's he would return to Romania and built a business empire, becoming a multimillionaire in the process. However, at no point during his tenure in Romania did he report his foreign holdings, unaware of his requirement to do so.

Bittner returned to the United States in 2011, whereupon he first learned of the requirement to report. Hiring an accountant, he late-filed reports for 2007 through 2011. The IRS notified him that the filings were incorrect; Bittner hired another accountant and submitted the reports correctly.

In assessing the penalty, the IRS determined that Bittner's failure to file was not willful, but assessed the maximum penalty of $10,000. The dispute was over how the penalty should be assessed:

• The IRS argued that the penalty should be per account; as Bittner had 272 accounts over the five year period, the penalty would be $2.72 million per their estimate.
• Bittner argued that it should be per report (each report covered a single year regardless of the number of accounts); as five reports were involved, the penalty would be $50,000 per his estimate.

Bittner filed a complaint in Federal District Court, which ruled in his favor. However, upon appeal, the Fifth Circuit Court of Appeals ruled in the IRS's favor, whereupon Bittner appealed to the Supreme Court, which granted certiorari to hear the case based on a split within the circuit courts.

The Ruling

The Court ruled that Bittner's interpretation of the tax law was correct, noting that under the portions of the law pertaining to willful failure (both civil and criminal), the law specifically allows a per-account penalty, but under the non-willful portion it does not specifically state such (the word "account" not even found there), and stated that "[w]hen Congress includes particular language in one section of a statute but omits it from a neighbor, we normally understand that difference in language to convey a difference in meaning (expressio unius est exclusio alterius)."

Part II-C of the opinion addressed the rule of lenity, arguing that statutes which are "penal" (such as the one in question) should be interpreted in favor of the accused (Bittner) and not the accuser (the IRS).

However, the ruling had a notable split within the Court: conservative Justice Gorsuch authored the opinion and delivered it for the Court, except he did not deliver it as to Part II-C. He was joined by liberal Justice Jackson (who agreed to the opinion in full), moderate Chief Justice Roberts, and conservative Justices Alito and Kavanaugh (the latter three did not join as to Part II-C). On the other hand, conservative Justice Barrett authored a dissenting opinion, agreeing with the IRS's interpretation, which was joined by fellow conservative Justice Thomas and liberal Justices Kagan and Sotomayor.