BANKING

Issues

Does an individual commit a single violation or multiple violations under the Bank Secrecy Act when the individual fails to report multiple foreign accounts during a single reporting period?

Court below

United States Court of Appeals for the Fifth Circuit

This case asks the Supreme Court to decide an issue of statutory construction; specifically, on what basis should the Secretary of the Treasury evaluate taxpayer violations of the Bank Secrecy Act (“BSA”). The Bank Secrecy Act requires citizens with a financial interest in a foreign bank account to report that financial interest to the Commissioner of Internal Revenue for each year that the interest exists. Alexandru Bittner contends that evaluating violations under the Bank Secrecy Act on a per-form basis is consistent with the statute’s text, history, and purpose. The United States counters that the text of the Bank Secrecy Act clearly outlines that a violation occurs on a per-account basis, not a per-form basis, and that the statute’s history and purpose confirm this viewpoint. The outcome of this case has heavy implications for tax law, banking regulations, civil penalties for tax violations, and financial interests in foreign bank accounts.

Questions as Framed for the Court by the Parties

Whether a “violation” under the Bank Secrecy Act is the failure to file an annual Report of Foreign Bank and Financial Accounts (no matter the number of foreign accounts), or whether there is a separate violation for each individual account that was not properly reported.

Petitioner Alexandru Bittner is a dual citizen of Romania and the United States. United States v. Bittner, at 1. Bittner emigrated to the United States in 1982, where he obtained his American citizenship and lived until 1990, when he moved back to Romania. Id.

Acknowledgments

Stephen J. Dunn, Supreme Court Grants Certiorari in Bittner, American Bar Association (Aug. 30, 2022).
Nicholas R. Peterson, Supreme Court to Review Non-Willful FBAR Penalties, Steptoe (July 13, 2022).
Dan Schweitzer, Supreme Court Report: Bittner v. United States, 21-1195, National Association of Attorneys General (June 30, 2022).

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Hawkins v. Community Bank of Raymore

Issues

Do loan guarantors have the same rights and protections that their applicant spouses are given by the Equal Credit Opportunity Act?
Does the Federal Reserve Board have the authority to define guarantors as applicants for purposes of the Equal Credit Opportunity Act?

Court below

United States Court of Appeals for the Eighth Circuit

The Supreme Court will consider whether protections for applicants in the Equal Credit Opportunity Act (“ECOA”) also extend to spouses who sign guaranties, and whether the Federal Reserve Board (the “Fed”), in promulgating Regulation B, permissibly expanded the definition of “applicant” in the ECOA to include such guarantors. See Brief for Petitioners, Hawkins & Patterson at i, 8; Brief for Respondent, Community Bank of Raymore at i. The loan guarantors in this case (Hawkins and Patterson) maintain that ECOA’s protections for applicants extend to guarantors, because the ECOA does not explicitly exclude them, and Regulation B clarifies that the ECOA definition of applicants includes guarantors. See Brief for Petitioners at 16, 56. Accordingly, Hawkins and Patterson assert that they have standing to sue to invalidate the loan agreement as illegal and unenforceable under ECOA. See id. at 51. Raymore, the creditor here, counters that the plain language of the ECOA protects only applicants, not guarantors. See Brief for Respondent at 17–21. Raymore contends that any attempt by the Fed, through Regulation B, to expand the definition of “applicant” in the ECOA to include guarantors was impermissible. See id. at 46. The Supreme Court’s decision in this case could affect the cost of borrowing and change the underwriting standards and costs for loans to married business owners.

Questions as Framed for the Court by the Parties

Whether “primarily and unconditionally liable” spousal guarantors are unambiguously excluded from being Equal Credit Opportunity Act applicants because they are not integrally part of “any aspect of a credit transaction”; and
Whether the Federal Reserve Board has authority under the ECOA to include by regulation spousal guarantors as “applicants” to further the purposes of eliminating discrimination against married women.

This case begins with a loan dispute between Valerie Hawkins and Janice Patterson, as guarantors, and the Community Bank of Raymore, (“Raymore”), as creditor. See Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937, 939 (8th Cir.