Eleventh Circuit affirms Tax Court lacks jurisdiction over FBAR penalty collection
Jenner v. Commissioner, No. 25-10014, 2025 BL 438147. Court Opinion.
FBAR penalties are not taxes. Taxpayers cannot use the Tax Court collection due process procedures to challenge them.
Holding
The Eleventh Circuit affirmed the Tax Court’s dismissal for lack of jurisdiction. The Tax Court has no authority to review FBAR penalties or administrative offsets used to collect them.
Why It Matters
FBAR penalties arise under Title 31, not the Internal Revenue Code.
Tax Court jurisdiction extends only to matters expressly granted by Title 26.
Collection due process hearings under §6330 apply only to unpaid taxes, not civil penalties under the Bank Secrecy Act.
Taxpayers challenging FBAR penalties must go to the U.S. district court or the Court of Federal Claims.
Key Facts
The IRS assessed FBAR penalties against Stephen and Judy Jenner for failing to report foreign bank accounts from 2005 through 2009.
Treasury’s Bureau of the Fiscal Service began collecting the penalties by offsetting up to 15 percent of their Social Security benefits.
The Jenners requested a collection due process hearing using Form 12153 and cited §6330.
The IRS denied the request, stating FBAR penalties are not subject to §6330.
The Jenners petitioned the Tax Court, which dismissed for lack of jurisdiction.
Statutory Framework
31 U.S.C. §5314 requires U.S. persons to report foreign financial accounts.
31 U.S.C. §5321 authorizes civil penalties for failure to file FBARs.
31 U.S.C. §3716 permits the collection of nontax debts by administrative offset.
§6330, which governs collection due process hearings, applies only to unpaid taxes imposed under Title 26.
§7442 limits Tax Court jurisdiction to matters conferred by the Internal Revenue Code.
Taxpayer Arguments
FBAR penalties should qualify for a collection due process review because the IRS assesses and collects them.
The IRS letter denying a CDP hearing functioned as a notice of determination.
Other penalties are subject to CDP review, so FBAR penalties should be as well.
Government Arguments
FBAR penalties are civil penalties imposed under Title 31, not taxes under Title 26.
§6330 does not apply because there is no unpaid tax or levy under the Internal Revenue Code.
The IRS letter was not a CDP notice of determination.
Proper review lies in the district court or the Court of Federal Claims.
Court’s Reasoning
Tax Court jurisdiction is strictly limited to the authority granted by Title 26.
FBAR penalties are imposed under the Bank Secrecy Act, not the Internal Revenue Code.
Civil penalties are legally distinct from taxes.
Prior cases allowing CDP review involved penalties created by the Internal Revenue Code.
Delegation of collection authority to the IRS does not convert FBAR penalties into taxes.
Administrative offset under §3716 follows a separate notice regime incompatible with §6330.
Timeline
2005–2009: Foreign accounts allegedly not reported.
IRS assesses FBAR penalties.
November 2022: Treasury notifies taxpayers of Social Security offsets.
December 2022: Taxpayers request a CDP hearing.
May 2023: IRS denies CDP request.
Tax Court dismisses for lack of jurisdiction.
December 2025: Eleventh Circuit affirms.
The Takeaway
If the penalty is an FBAR penalty, the Tax Court is closed for business. Challenges must be brought to the district court or the Court of Federal Claims, regardless of who collects the debt.