02 March 23
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What does it all mean? On the surface, not a lot: Bittner is a minor case about civil penalties for people who fail to disclose their foreign accounts to the IRS. Dig deeper, though, and the decision suggests a certain libertarianism in Jackson’s jurisprudence that may distinguish her from the two other progressive justices. That trait does not map neatly onto the left–right divide that emerges in so many cases, as Tuesday’s ruling demonstrated. Instead, it points toward a skepticism of government power that should cheer civil libertarians across the political spectrum.
Bittner revolved around a provision of the Bank Secrecy Act, or BSA. The statute requires American citizens and residents to file an annual report with the IRS identifying all of their foreign accounts if the money they hold, in aggregate, exceeds $10,000. A person who inadvertently fails to file these reports—a “nonwillful” infraction, as lawyers call it—incurs a penalty of up to $10,000 per “violation.” Attempted enforcement of the BSA has raised a thorny question: What counts as a “violation” under the law? The government says individuals incur a $10,000 fine for each foreign account they fail to report. Those facing BSA penalties say they incur $10,000 for each annual report they fail to file.
The difference is important for Alexandru Bittner, the defendant in this case, who holds 272 foreign accounts that he failed to report over five years. (No one claims he’s using them illegitimately—Bittner is a dual American-Romanian citizen with a thriving business career in Romania.) If he’s fined per report, he owes $50,000. If he’s fined per account, he owes $2.72 million.
SCOTUS sided with Bittner on Tuesday, albeit barely. Gorsuch’s majority opinion was joined by Jackson along with John Roberts, Samuel Alito, and Brett Kavanaugh. Barrett’s dissent was joined by Clarence Thomas, Sonia Sotomayor, and Elena Kagan.
The majority and dissenting opinions dueled over the statutory text, but Gorsuch went a step further, highlighting two other reasons to interpret the BSA narrowly. First, he pointed out that the IRS has taken inconsistent positions on this question: Until 2019, it suggested in guidance documents that the penalty applied to each missed report, not to each unreported account. Then the agency changed its mind. That’s particularly troubling given that many Americans have no idea about their obligations under the BSA, and the government hasn’t done much to educate them. U.S. embassies and consulates stopped providing tax consulting for American expatriates a decade ago. The relevant form (which does not create tax liability) isn’t even an IRS document; it’s published by the Treasury Department, and the submission process is totally different from the process for other tax documents. In short, it is very easy for well-intentioned people to run afoul of the BSA.
Which leads to a second reason to reject a broad reading of the law: the rule of lenity. This principle requires federal courts to interpret laws against the government and in favor of defendants when they are unclear or ambiguous. It’s typically invoked in the criminal context, but applies to civil fines, too. And, Gorsuch wrote, it’s especially appropriate here. The rule “exists in part to protect the Due Process Clause’s promise” that laws must provide “a fair warning” that “the common world will understand,” he asserted. Here, “the government’s own public guidance documents” supported a more lenient interpretation before taking an about-face. Many qualified accountants shared that view of the law until the IRS decided it was incorrect. “If many experienced accountants were unable to anticipate the government’s current theory,” Gorsuch concluded, “we do not see how ‘the common world’ had fair notice of it.”
Notably, only Jackson joined this portion of the opinion. Roberts, Alito, and Kavanaugh refused to sign on, though they joined the rest of Gorsuch’s decision. Why? It’s not hard to guess. Gorsuch is the court’s most consistent proponent of the rule of lenity, sometimes to the conservatives’ dismay. In 2019’s U.S. v. Davis, for instance, Gorsuch wrote the majority opinion striking down a federal law imposing harsh mandatory minimum sentences on certain offenders. Resisting a different interpretation that would spare the law—and preserve the defendant’s lengthy sentence—he invoked the rule of lenity, declaring that “ambiguities about the breadth of a criminal statute should be resolved in the defendant’s favor.” This approach infuriated Kavanaugh, who wrote an acerbic dissent accusing Gorsuch of misapplying the principle. Thomas, Roberts, and Alito joined Kavanaugh in full.
More recently, in 2022’s Wooden v. U.S., Gorsuch wrote a mini treatise endorsing the rule’s expansion. Some decisions suggest that it applies only to “grievous ambiguities,” he noted, but “this ‘grievous’ business does not derive from any well-considered theory about lenity or the mainstream of this court’s opinions.” Defendants should not have to prove that a law is severely or hopelessly ambiguous; rather, any “reasonable doubt” about its scope “should be resolved in favor of liberty.”
Just as this theory can repel conservatives when applied to violent crime, it can turn off liberals when applied to white-collar offenses and regulatory mandates. Sotomayor joined most of Gorsuch’s full-throated support for the rule of lenity in Wooden. Yet when the court released Bittner on Tuesday, Sotomayor was in dissent, along with Kagan. Both justices telegraphed their votes during oral arguments when they suggested that only wealthy tax-dodgers attempting to deceive the IRS could get caught up under the law. Jackson viewed things differently. “Realistically,” she said, the reporting requirement applies to “anybody who’s living overseas.” Unlike Sotomayor and Kagan, Jackson understood that it isn’t just rich business magnates who face punishment under this law, but also working-class expats. And she alone signed onto Gorsuch’s application of lenity.
Bittner thus shows how the rule cuts across ideological lines. So does another case lurching toward SCOTUS: Cargill v. Garland, a challenge to the ban on “bump stocks,” devices that transform semi-automatic rifles to mimic automatic weapons. The government issued a regulation outlawing bump stocks after one was used to kill 60 people in 2017. In January, however, the 5th U.S. Circuit Court of Appeals invalidated the ban, citing (among other reasons) the rule of lenity. In the coming years, more conservative courts will use lenity in striking down more regulations favored by progressives. Perhaps Sotomayor and Kagan refused to apply the rule here in part because they are wary of its creeping expansion into the administrative state and firearm restrictions.
If that’s true, it seems Jackson does not share their fears, just as she does not share their concerns that Bittner will let loaded tax-cheats off the hook. Those few data points we have on the newest justice all point toward a suspicion of government overreach, though it’s too soon to say how consistently she’ll apply these views. The one indubitable conclusion so far is that Jackson is not just a liberal but a civil libertarian, and whenever the government seeks to punish a citizen, it should never take her vote for granted.
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