A federal district court has rejected a taxpayer’s argument that statutes and regs requiring U.K. citizens with U.S. permanent resident status to file income tax returns and Reports of Foreign Bank and Financial Accounts (FBARs), when read with the U.S.-U.K tax treaty, are so ambiguous that they violate the Due Process Clause of the Fifteenth Amendment. The court reiterated that taxpayers of ordinary intelligence would understand their reporting and payment obligations.

Take away. Finding “intent” associated with the failure to file an FBAR has been a familiar theme in recent cases. The court here noted that the government would need to prove beyond a reasonable doubt that the taxpayer acted willfully with respect to the failure to file tax returns and FBARs, and corruptly with respect to the obstruction of the internal revenue laws. “The presence of this scienter requirement undercuts any due process void for vagueness challenge,” the court held.


The taxpayer was charged with willful failure to file individual income tax returns and FBARs, as well various tax evasion crimes. The taxpayer argued that the charges should be dismissed. According to the taxpayer, statutes and regulations requiring him to file individual income tax returns and FBARs, as well as those attaching criminal liability to this failure, were unconstitutionally vague.

Court’s analysis

The court first found that the void-for-vagueness doctrine requires that a penal statute define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement. The court must first determine whether the statute gives the person of ordinary intelligence a reasonable opportunity to know what is prohibited. The court also must consider whether the law provides explicit standards for those who apply it.

The court further found that an alien individual who is a lawful permanent resident of the U.S. is treated as a resident of the U.S. for tax payment and reporting purposes. A U.S. resident is required to file an income tax return each year. A dual resident of the U.S. and the U.K. may claim benefits under the U.S.-U.K. tax treaty and be treated as a nonresident alien for the purposes of computing his or her U.S. federal income tax liability. The court found that a lawful permanent resident of ordinary intelligence would know that he or she needed to either file a tax return and pay taxes on worldwide income, or (file a tax return reporting worldwide income and indicate that he or she is taking a particular protection under the treaty.

Turning to the FBAR, the court found no ambiguity regarding the duty to file for persons in and doing business in the United States. An alien lawful permanent resident of ordinary intelligence would understand his or her obligation to file an FBAR, the court held.


The court observed that even before the term U.S. resident was defined under the FBAR regs, an alien lawful permanent resident of ordinary intelligence, not in or doing business in the U.S., would have understood to be under the obligation to file an FBAR based on the definition of U.S. resident in other parts of the Tax Code.

Additionally, the court held that the criminal statutes were not unconstitutionally vague. A person of ordinary intelligence would understand that these statutes impose criminal penalties on persons engaging in the conduct in which taxpayer was alleged to have engaged.