US v. Richard Rund
Split Score
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Case Summary
Disposition
Affirmed
The Fourth Circuit affirmed a district court’s summary-judgment order upholding $2.9 million in civil FBAR penalties that the IRS assessed against Richard M. Rund for willfully failing to report numerous foreign bank accounts. The court held Rund’s violations were willful under the Horowitz recklessness standard and, assuming without deciding that the Excessive Fines Clause applies, concluded the penalties were not grossly disproportionate and therefore constitutional.
Circuit Split Identified
Legal Issue
Whether civil FBAR penalties imposed under 31 U.S.C. § 5321(a)(5) are “fines” subject to the Eighth Amendment’s Excessive Fines Clause.
Circuit Positions
Civil FBAR penalties are not fines for Eighth-Amendment purposes; Excessive Fines Clause does not apply.
Civil FBAR penalties are fines subject to the Excessive Fines Clause.
Fourth Circuit acknowledges split and declines to decide, assuming without deciding that the Excessive Fines Clause applies.
Conflict Summary
The First Circuit holds that civil FBAR penalties are primarily remedial and therefore not subject to the Excessive Fines Clause, while the Eleventh Circuit holds that the penalties function, at least in part, as punishment and are therefore subject to the Clause. The Fourth Circuit, in this opinion, expressly notes the split and declines to decide the issue, assuming arguendo that the Clause applies.