A $2,286,954 Report of Foreign Bank and Financial Accounts (“FBAR”) penalty—about half of the largest $4.57 million account balance Eugene Niksich later disclosed—survived the willfulness fight but not the constitutional one. On June 4, 2026, the Eleventh Circuit held in United States v. Niksich that the taxpayer’s FBAR failures for 2006 through 2012 were willful, yet remanded for the district court to decide whether the penalty was an excessive fine.¹

The facts were difficult for the taxpayer. Niksich opened a Swiss account at AKB Privatbank Zurich AG under the alias “Misty,” the name of his dog; paid for mail-hold services; hid the account from his then-wife; moved assets through Swiss and Panamanian accounts; answered “No” to the Schedule B foreign-account question in 2006; and left the same question blank for 2007 through 2012.¹ The account values were not trivial: the disclosed foreign balances included a $4,573,907 DZ Bank securities account in 2010 and Panamanian accounts exceeding $2.3 million and $1.0 million in 2012.¹

What Niksich changes

The baseline rule remains unforgiving. A U.S. person with a financial interest in, or signature authority over, foreign financial accounts must file Financial Crimes Enforcement Network (“FinCEN”) Form 114 if aggregate foreign account value exceeds $10,000 at any time during the year.² The annual FBAR due date is April 15, with an automatic extension to October 15.³ For willful violations, 31 U.S.C. § 5321(a)(5) authorizes a penalty equal to the greater of $100,000 or 50% of the account balance at the time of the violation; the inflation-adjusted dollar floor for penalties assessed on or after January 17, 2025, is $165,353.⁴ ⁵

The new leverage is constitutional, not factual. In United States v. Schwarzbaum, the Eleventh Circuit held that FBAR penalties are punitive enough to fall within the Eighth Amendment’s Excessive Fines Clause and that proportionality must be examined account by account.⁶ Niksich applies that holding to a taxpayer with very poor facts. The court did not reduce the penalty. It said the record was not developed enough to decide whether the penalty was “grossly disproportional,” so the district court must consider account balances, penalty calculations, and harm on remand.¹

Tax implications

For U.S. citizens, green-card holders, and resident aliens abroad, Niksich is a warning that the foreign-account question on Schedule B is not cosmetic. Section 61 brings interest, dividends, and gains into gross income unless a specific exclusion applies, and U.S. citizens and resident aliens are taxed on worldwide income even when they live outside the U.S.⁷ A Swiss or Panamanian brokerage account can therefore create two parallel failures: unreported income on Form 1040 and undisclosed account reporting on FBAR.

Foreign Account Tax Compliance Act (“FATCA”) reporting is separate. Form 8938 under IRC § 6038D generally applies when specified foreign financial assets exceed the applicable threshold; for an unmarried taxpayer living in the U.S., that threshold is more than $50,000 on the last day of the year or more than $75,000 at any time, while an unmarried taxpayer living abroad uses more than $200,000 year-end or more than $300,000 any time.⁸ Section 6038D imposes a $10,000 penalty for failure to disclose, plus $10,000 continuation penalties for each 30-day period after IRS notice, capped at $50,000.⁹ Form 8938 does not replace the FBAR; many accounts require both filings.⁸

The penalty posture now turns heavily on willfulness. Nonwillful FBAR exposure is constrained after Bittner v. United States, where the Supreme Court held that the $10,000 statutory nonwillful penalty applies per report, not per account.¹⁰ Willful exposure is different: the statute is account-focused, and concealment facts—aliases, numbered accounts, mail holds, false Schedule B answers, moving funds after compliance conversations, and withholding records from preparers—can support a recklessness finding even without an admission of intent.¹ ⁴

For cross-border families, the practical lesson is to build the record before the IRS builds it for you. Corrective filings should reconcile Form 1040 income, Schedule B answers, FBAR maximum balances, Form 8938 thresholds, currency conversion, account ownership, and any reasonable-cause narrative. Once the government frames the case as willful, the taxpayer may still have an Excessive Fines Clause argument in the Eleventh Circuit—but only if the account-by-account proportionality record is strong.

Contact Global Taxes LLC to review undisclosed foreign accounts, evaluate whether a voluntary correction path remains available, and model FBAR and Form 8938 penalty exposure before responding to an IRS notice. This article is informational only and does not constitute professional advice.

Works Cited

1. U.S. Court of Appeals for the Eleventh Circuit. “United States of America v. Eugene J. Niksich, No. 24-12882.” 4 June 2026, https://media.ca11.uscourts.gov/opinions/pub/files/202412882.pdf

2. Financial Crimes Enforcement Network. “Report Foreign Bank and Financial Accounts.” FinCEN, https://www.fincen.gov/report-foreign-bank-and-financial-accounts

3. Financial Crimes Enforcement Network. “New Due Date for FBARs.” FinCEN, 16 Dec. 2016, https://www.fincen.gov/news/news-releases/new-due-date-fbars-0

4. Legal Information Institute. “31 U.S. Code § 5321 - Civil Penalties.” Cornell Law School, https://www.law.cornell.edu/uscode/text/31/5321

5. Legal Information Institute. “31 CFR § 1010.821 - Penalty Adjustment and Table.” Cornell Law School, https://www.law.cornell.edu/cfr/text/31/1010.821

6. U.S. Court of Appeals for the Eleventh Circuit. “United States of America v. Isac Schwarzbaum, No. 22-14058.” 23 Jan. 2025, https://media.ca11.uscourts.gov/opinions/pub/files/202214058.op2.pdf

7. IRS. “Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.” Dec. 2025, https://www.irs.gov/publications/p54

8. IRS. “Summary of FATCA Reporting for U.S. Taxpayers.” https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers

9. Legal Information Institute. “26 U.S. Code § 6038D - Information with Respect to Foreign Financial Assets.” Cornell Law School, https://www.law.cornell.edu/uscode/text/26/6038D

10. Supreme Court of the United States. “Bittner v. United States, 598 U.S. 85.” 28 Feb. 2023, https://www.supremecourt.gov/opinions/22pdf/598us1r6_k53l.pdf

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high-net-worth families and their advisors. Alicea has more than 20 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm. Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates, and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, and foreign companies wanting to do business in the U.S. Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPA), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the Global Referral Network (GRN).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession. Alicea has also been recognized as a leading expert for tax advice and she has been invited to join Advisory Excellence, as their exclusively recommended tax expert in the USA.

In 2021 and 2022, Alicea won Gold and Silver in Citywealth's Powerwomen Awards for USA - Woman of the Year - Business Growth (Boutique). In 2023, she received Gold for Company of the Year - Female Leadership (Boutique) and was listed in the Global Elite Directory, an exclusive directory of top wealth advisors.

In 2024, Alicea was named to Citywealth's Top 50 Tax Professionals, shortlisted for the Magic Circle Awards, peer-nominated as a Non-Legal Adviser, and appointed as a judge for the Citywealth Powerwomen Awards USA. She is also certified as an International Business Advisory Firm by AuditTrust International and a proud STEP member for 2024/2025.