A District Court recently affirmed that a taxpayer who failed to file multiple years of required Reports of Foreign Bank and Financial Accounts (FBARs) must pay more than $500,000 in penalties and interest. The taxpayer argued that the penalty should be reduced under the Eighth Amendment’s Excessive Fines Clause, but the court rejected that argument. It held that the government incurred substantial tax-related losses investigating the taxpayer’s misconduct and that the penalty was not grossly disproportionate to the violations. U.S. v. Saydam, 2025 PTC 377 (N.D. Cal. 2025).
FBAR Penalty Case Background
Tuncay Saydam, a dual U.S.–Turkish citizen born in Turkey, maintained several bank accounts in Turkey with balances exceeding $10,000 during the 2013–2017 period.
On March 1, 2021, the IRS assessed a $437,564 civil penalty against Saydam for willfully failing to report these foreign accounts, as required by the Bank Secrecy Act, 31 U.S.C. § 5314. With interest, the total amount reached $544,933. On October 3, 2024, following a jury trial, the jury found that Saydam willfully violated the FBAR reporting requirements for all years at issue—“willful” being defined as knowing, willfully blind, or reckless. [Docket Nos. 85 (Final Jury Instructions); 87 (Jury Verdict).]
Saydam then filed a motion to reduce the penalty under the Excessive Fines Clause of the Eighth Amendment. [Docket Nos. 93 (Mot.); 95 (Reply).] The court denied the motion, arguing that the Excessive Fines Clause does not apply, and that even if it did apply, the assessed civil penalty of $437,564 was not grossly disproportionate to the offense.
The Government’s Response to FBAR Penalty Appeal
In opposing the motion, the Government presented evidence that, given the number of Saydam’s foreign accounts between 2013 and 2017 and their aggregate value, the imposed penalty was significantly lower than the maximum statutory penalty that could have been allowed.
If the government had calculated the penalty based on the sum of all aggregate balances divided by two (applying the 50% statutory formula), the Government could have assessed a penalty of $1,434,055. Instead, it chose to assess the maximum statutory penalty for one year, 2014, the year with the highest aggregate balance and then spread the penalty across all five noncompliant years.
The government further noted that if penalties had been calculated separately for each individual account and the maximum $100,000 per-account penalty was applied to his smaller individual accounts, the total penalty could have reached $2,523,484. [Docket Nos. 94-1 (Lolita De Palma Decl., Nov. 26, 2024) ¶ 1; 94-2 (FBAR Penalty Calculations).]
What are FBAR Penalties?
Under the Bank Secrecy Act, taxpayers must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), with the Financial Crimes Enforcement Network (FinCEN) for each calendar year in which they hold more than $10,000 in a foreign bank account. 31 C.F.R. §§ 1010.350(a), 1010.306(c).
Failure to file an FBAR may result in a civil penalty of up to $10,000 per violation. 31 U.S.C. § 5321(a)(5)(B).
Willful failure to file carries a significantly higher penalty—up to the greater of $100,000 or 50% of the account balance at the time of the violation. 31 U.S.C. § 5321(a)(5)(C)–(D).
How We Can Help with FBAR Penalties
If you have unreported offshore bank accounts or other assets, the best time to address compliance issues is now. At Rosefelt Tax Law, we have over 30 years of experience in resolving serious offshore compliance issues through Streamlined Filing Compliance Procedures and Voluntary Disclosures. As a one stop shop, we prepare delinquent tax returns, FBARs, or other necessary tax forms in-house, and provide you with legal guidance and advocacy necessary to navigate complex IRS offshore compliance matters.
Call us today at (866) 995-0061 for a free, no-obligation case review to discuss your best options or learn more about Offshore Tax Compliance issues here. Let us put our knowledge and experience to work for you to help resolve your offshore issues and protect your financial future.
Authors: Daniel S. Rosefelt, Attorney-CPA, Carley Rosefelt