What the Eighth Amendment says
The Eighth Amendment to the U.S. Constitution provides: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” The middle phrase, the Excessive Fines Clause, limits the government’s power to take money as punishment for an offense. It reaches civil penalties as well as criminal fines, so long as the penalty serves at least in part to punish (Austin v. United States, 509 U.S. 602 (1993)).
An evolving area of law. Whether the Clause applies to willful FBAR penalties at all is a question the courts of appeals have answered differently since 2022, and the Supreme Court has not resolved it. New decisions arrive often; this article is current as of November 7, 2026.
Where things stand
- Eleventh Circuit
- Yes, a fine. United States v. Schwarzbaum, 127 F.4th 259 (11th Cir. 2025), reaffirmed in United States v. Niksich, No. 24-12882 (11th Cir. June 4, 2026). Covers Alabama, Florida and Georgia.
- First Circuit
- No, not a fine. United States v. Toth, 33 F.4th 1 (1st Cir. 2022). The Supreme Court declined to review it in 2023; Justice Gorsuch dissented.
- Fourth Circuit
- Assumed, not decided. United States v. Rund, No. 24-1958 (4th Cir. Sept. 4, 2026), held a $2.9 million penalty was not excessive even if the Clause applies.
- Everywhere else
- No court of appeals ruling yet, including the Ninth Circuit (California). District courts there have followed the Eleventh Circuit or assumed the Clause applies.
- What to watch
- Jouppi v. Alaska, No. 25-246, set for argument at the Supreme Court on December 1, 2026, on how courts measure whether a fine is excessive.
Why it matters: an example
The Eighth Amendment bars “excessive fines.” If a willful FBAR penalty is a fine, a court can strike or reduce it when it is grossly disproportional to the violation. The willful penalty is the greater of $100,000 (adjusted for inflation) or 50% of the account balance — so the $100,000 figure can dwarf a small account.
The two sides of the split
- Not a fine (First Circuit). Toth treated the willful penalty as remedial: it compensates the government for lost tax revenue and the cost of investigating hidden foreign accounts, which Congress viewed as a major tax loophole. A purely remedial sanction is not a “fine.”
- A fine (Eleventh Circuit). Schwarzbaum held the penalty is punitive at least in part. Its size depends on the taxpayer’s culpability and the account balance — not on any tax loss or investigation cost — and Congress raised it in 2004 to deter noncompliance. Under Supreme Court precedent, a sanction that punishes even in part is a fine.
- Justice Gorsuch’s view. Dissenting from the denial of review in Toth, he wrote that the government did not calculate Ms. Toth’s penalty from any loss or expense, and that the question “is not … whether [a monetary penalty] is civil or criminal, but rather whether it is punishment” (quoting Austin v. United States, 509 U.S. 602 (1993)). No other Justice joined.
If the Clause applies, how is “excessive” measured?
- The test. A fine is excessive if it is “grossly disproportional” to the gravity of the offense (United States v. Bajakajian, 524 U.S. 321 (1998)). Courts weigh the nature and extent of the violation, whether it was tied to other illegal activity, the other penalties available, and the harm caused.
- Account by account. The Eleventh Circuit measures each penalty on each account in each year — which is how the small Swiss account in Schwarzbaum was singled out. The Fourth Circuit left that question open in Rund because the parties argued only the total.
- Most penalties still survive. In Rund, more than 40 reporting failures on more than a dozen accounts supported $2,915,663. In United States v. Saydam (N.D. Cal. Nov. 18, 2025), the court followed Schwarzbaum on the threshold question but upheld $437,564, pointing to recklessness, a $29,006 tax loss and the cost of the audit. In United States v. Leeds (D. Idaho), the court found the penalties against an estate not grossly disproportional.
- The pending Supreme Court case. Jouppi asks whether courts judge the gravity of an offense in the abstract or by the specific defendant’s conduct. The case involves an airplane forfeited over a six-pack of beer, not FBARs, but the answer will shape every FBAR excessiveness argument.
Practical points
- Build the record. In Niksich, the Eleventh Circuit sent the case back because neither side had developed the facts that decide excessiveness — the June 30 balances, how the penalty was computed, and the harm to the government.
- Know the account-level numbers. Balances on the violation date, the penalty on each account, and any actual tax loss are the facts that move these cases.
- Location matters. The defense is strongest in the Eleventh Circuit, unavailable in the First, and unsettled almost everywhere else — including California.
More surveys
Please see more surveys of how the federal courts of appeals have answered these questions:
- FBAR penalty cases — the leading FBAR case in each circuit, with a map of the Excessive Fines split.
- The TFRP, circuit by circuit — how each circuit applies the Trust Fund Recovery Penalty’s two elements, responsible person and willfulness, and where the circuits disagree on defenses.
- All surveys
Sources
- United States v. Schwarzbaum, 127 F.4th 259 (11th Cir. 2025)
- United States v. Niksich, No. 24-12882 (11th Cir. June 4, 2026)
- United States v. Toth, 33 F.4th 1 (1st Cir. 2022); Toth v. United States, 598 U.S. 1153 (2023) (Gorsuch, J., dissenting from denial of certiorari)
- United States v. Rund, No. 24-1958 (4th Cir. Sept. 4, 2026)
- United States v. Saydam, No. 4:22-cv-07371 (N.D. Cal. Nov. 18, 2025)
- United States v. Leeds, No. 1:22-cv-00379 (D. Idaho Feb. 13, 2026)
- United States v. Bajakajian, 524 U.S. 321 (1998); Austin v. United States, 509 U.S. 602 (1993)
- Jouppi v. Alaska, No. 25-246 (U.S., cert. granted July 20, 2026)
- 31 U.S.C. § 5321(a)(5)
General information only. This article is not legal or tax advice and does not create an attorney-client relationship. This is an actively developing area of law; check for later decisions before relying on it. Facing a willful FBAR penalty? See how I help or request a consultation.