that afternoon your honor my name is lavar taylor i'm appearing on behalf of the a public chain voiding this case involves the issue of whether or not the i r s can impose a penalty in excess of ten thousand dollars per form  i want to emphasize that what we're dealing with here is an un willful situation the reason i emphasize that is because the government is brave uses rhetoric like that hidden accounts large amounts of unreported income well that's willful ok if somebody is hiding their account they're acting intentionally here we're dealing with non willful situation so all of the government's rhetoric about oh well what about the large amounts of unreported income well  doesn't apply here see if there's large amounts of unreported income it's quite a lot it's much more likely that there's going to be a willful violation and in this case the tax on this boy's additional income for two one thousand dollars was less than one thousand five hundred dollars so it's important that we keep that in mind we're not dealing with people who are going out and hiding money from the government intentionally and  what happens is that when somebody finds out that oh i have to follow the far i come in they come in and they follow us far so here the government got all the information what happened here was there was one f r file late but it was complete and it was accurate and the thousand dollars we think that's pretty clear the government says well the word annie has some connotations well perhaps there might be a situation where there's more than one penalty associated with a late filing  language that that talks about what goes or does not go in the f bar itself that language says that it's up to the government to say well what's in the f law so whether  regulation of that goes on and subsection g it talks about limitations on the government's ability to ask for information whether it's twenty five or more accounts but otherwise there is no guidance whatsoever in the regulation and it's all your in your in your view if the regulations said for every foreign account you have you have to file a separate f r and you had ten relevant accounts and you filed no ask ours could the government then hands on and ten separate penalties if the regs made it clear that there had to be a separate are filed for every account i think potentially yes there's a question of whether or not the regulation would be valid in light of the language of the statute which we're not supposed to put a burden on that there are people who file these unnecessarily but if the regulation were valid the government have a much stronger position in that situation yes and so what's  but but the language of the penalty statute makes no reference whatever to a per account penalty nor does any of the language we're discussing now talk about oh you have to file you know you have to list all the accounts fact the regulation and subsection d says if you have twenty five or more accounts you don't list the full the detailed information on the accounts you just list the number of accounts so as i understand the way and i'll ask your colleague this but as i understand the way this works if you have on the government's position if you have time accounts and you fail to timely file an after are there are ten violations but if you have a one million accounts and you fail to timely filing now are there's only one violation because all you do is check the box you don't you know are required to list the accounts yes the not the cards our position is once there is one form it's filed once a year and the failure to timely file the form is one violation yes but it is i don't just know i was going to say but it isn't but since if you have more than twenty five theorems you don't even give account information you just check a box if you have a computed by looking to the balances in the non compliant accounts so there's still one violation criminally and one but it's just as there's one violation civilly but the the willful penalty on the civil side is computed by looking to the high balances of the accounts on as of the date of the violation so counsel you can have a violation for failure to keep records but the violation here is for failure to file a report good afternoon i'm french and googling the counsel for the united states and i'd like to turn directly to the language of the statutes i think judge and who do you write an upright with the key question it is in this case and that is identifying what is a violation of section fi fourteen for purposes of the penalty if you look at the penalty statute it says the treasury may impose a penalty on any person who violates any provision of section reports he then the statute goes on to set forth here around based on whether the violation is will work or not will but the question what constitutes a violation of section five thousand three hundred and fourteen is the same regardless of whether the conduct as well were not willful and if you look totality of the statutory scheme what's the meaning of the twenty five account limit but it is it to say that you could impose up to twenty five file ations because you couldn't do it after twenty allowed person that had over twenty five accounts to simply list the number of accounts on the reporting for and then require them to maintain records and provide those records to the government when you know we did an examination and for the you may call it a firm a form appendix that still there only to be inflamed in something like this but the point is it says twenty five as some sort of magic number about burdening the taxpayer  and if you go under over twenty five you can't have a violation can you for failure to would disclose an account yes you can if it was way way way way counsel i'm sorry to interrupt your answer but i'm looking at the ask for and i'm looking at items forty in on the f r and it says do you have a financial interest in twenty five dollars or more accounts yes or no now let's say you have a one hundred accounts and you don't file an for you have one hundred dollars accounts with one hundred thousand dollars each on them you don't file an f bar so you don't answer question fourteen the way the statute in the regs are set up you can only have one violation right we  e now so you think you think that not filing an f bar when you have fifty accounts when all if you filed it you'd simply check yes and that would be it that you can have fifty separate violations even though all follows up with that person and that person makes people some disclosure late of the number has that it has to your knowledge has the government ever for somebody who failed to file an ast bar when they had more than twenty five accounts charge them for multiple non willful violations ever yes we have that is the bit in your case that was the subject of the twenty eight chain letter i'm that was sent to this court that involved an individual who initially violation who had more than twenty five accounts who filed no as far yes that is the bit where he's ok so and explain to me your view of why the judge there was wrong when  he's individuals who are required to file an f are obligated to file only one report per year it stands to reason that a violation of the statute would attach directly to the obligation the statute creates the filing of a single r construe that that difference as meaningful and so what but what the way the court erred there was that the court failed to appreciate that the penalty applies to any violation of section section three hundred and fourteen and uses bro statutory and regulatory scheme was clear that the penalty could be imposed on a per count basis it is is that i think government's position now that i mean putting aside the rule of law to be assured that intent but it's not a violation if there you're merely negligent so this i don't know i guess i guess the way i read the regs and the statute i mean putting aside which way we would go on the clear issue it certainly seems like ors let's assume that we say it's not so clear what do we do then there are no regulations that are interpretive on this there is to my knowledge  no interpretation that's from provided in your briefing doesn't suggest that you're making interpretation by litigation so what do we do if we think this just isn't clear don't know what to do with it and that i just i'm sorry to interrupt you but i do want to focus on something that may be at the margin of this discussion but i think you have to look at everything in the statute that's what you're telling me i'm supposed to do i may assign different weights to everything but what do i do with the twenty five you tell me that it's this historical artifact of the transition that this country made from the  is to say you can get twenty five but you can get more for non willful violations i'm not saying you can do that but i have to read all of that stuff and it seems to me there is a limit on the number of willful violations that you can they're proposed they were never implemented how can we can consider that i think that the way the court should view the regulatory rule which is maybe going away feeling with two thousand five hundred and twenty five and work you know is is the treasury department's response to the and the twenty five account feature is not in the stamps that is only in the regulations and that is only to deal with issues of administrative burden i think going back to your original question what should the court do if  willful violations and it decided that it was going to start punishing violations as well yet that includes cases such as this where a person negligently fails to investigate and make a determination as to what their reporting obligation is in light of that if a person has failed non locally fails to report fifteen accounts person one account and the penalty is capped at ten thousand then there's really very little incentive to comply with the statute which is exactly what congress is trying to get people to do and for we are talking about negligence here and so the detroit effect is to some degree minimized by that but as i understand what you're saying it's either all or you can do as many accounts as the individual had asked in a legit lee fields to disclose or you can do one those are the two choices we have there's no place in between  ten thousand dollars fine for a negligent failure to disclose or you have authority to as many accounts as this person has even if they have two dollars in every bank in oxfordshire and there are three hundred banks not for sure you get ten thousand dollars for each one of them right i mean your authority you're authorized to do this that that is correct we think that the statute what allow the treasury department to do that  of the the non willful d language they omitted the word account it's not in there it was already in the well full version of all point of the better decision is that was a conscious that was a conscious effort the word account appears and i think over one hundred sections of of the bank six and so congress knew how to construct the penalty on a per account basis and did not do that they did not use the word anywhere in the non willful penalty provisions and again if you focus on the reason why there's a reason why we've offered examples they need to scrape by ac d c offers examples of how you can lead to absurd results if you the back to what i said at the beginning of this this argument we're dealing with people who don't know the rules and so somebody who doesn't know the rules shouldn't they the way they get incentivized is ok we're going to get them with a ten thousand dollar now they know something you don't forget and and so the whole notion that you know there's an incentive doesn't make sense when they simply don't know about the rules so going back going back to what can happen under the government's interpretation of the statute you can even have situations where people have a willful violation let's say you have a willful violation where there's one hundred thousand dollars and then i count and it's well for the maximum  one hundred thousand dollars that the somebody has tannic has twenty accounts each with five thousand dollars in it they can get hit with a two hundred one thousand dollars penalty to allow the government to do that makes give them the authority to do that makes but what do i make of twenty five accounts that twenty five account amount is it just in the air out there or does it have some significance profiling