Report on recent US international tax developments – 3 March 2023

The United States (US) Supreme Court on 28 February held in Bittner v United States (pdf) that the Bank Secrecy Act’s (BSA) $10,000 penalty for nonwillful failure to file FBAR reports applies per annual report/filing, not per account. In a 5-4 decision, the Court rejected the Government's argument that the nonwillful penalty applies on a per account basis and resolved a split among the circuits. Justice Gorsuch wrote: “Best read, the BSA treats the failure to file a legally compliant report as one violation carrying a maximum penalty of $10,000, not a cascade of such penalties calculated on a per-account basis.”

Although the Supreme Court decision is pro-filer for accidental or negligent failures to file, taxpayers nonetheless should bear in mind that the more severe willful penalty explicitly applies to each account by statute and that the Government can assess the willful violation where it deems appropriate.

In a recently released Chief Counsel memorandum (AM 2023-001 (pdf)), the Internal Revenue Service advised that payments from a US depository institution to a foreign corporation, either (1) for expenses the corporation incurs to institute a sponsored American Depositary Receipts program with holders in the US and abroad or (2) under a revenue-sharing arrangement, both represent consideration for the US depository institution's exclusive right to establish, control and exploit the trading of the foreign corporation's American Depositary Receipts in the US. Therefore, the payments to the foreign corporation are treated as solely US source income and, if no treaty applies, are subject to 30% US withholding under Internal Revenue Code Section 1442. 

During a 27 February OECD Tax Talk, Grace Perez-Navarro, outgoing Director of the Organisation for Economic Co-operation and Development’s (OECD) Centre for Tax Policy and Administration, said regarding Pillar One, “the intense negotiations of the multilateral convention are well under way and we are still aiming for finalizing the convention by the middle of the year for signature.” Pillar Two and the minimum tax have been made a reality, she said, and pointed to the European Union, Australia, Canada, Colombia, Indonesia, Japan, South Korea, Malaysia, Mauritius, South Africa, Switzerland, Thailand, the United Kingdom, and the United Arab Emirates as all having taken steps to implement the minimum tax. 

Deputy Director of the Centre, Achim Pross, said a peer review process starting this year will look at how countries are applying the 15% minimum tax rules “as they’re in the process of being drafted.”

Also, OECD Secretary-General Mathias Cormann presented a report (pdf) to the G20 Finance Ministers and Central Bank Governors at their 24-25 February meeting, in which he laid out the current status of the BEPS 2.0 project.


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
  • Arlene Fitzpatrick


  • Joshua Ruland

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.