Category Archives: FBAR

Start with “The Little Red FBAR Book”
https://citizenshipsolutions.ca/ina-349/little-red-fbar-book/

https://twitter.com/ExpatriationLaw/status/1738738842763411716

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General Commentary

The FinCEN 114 AKA FBAR requirement is NOT part of the Internal Revenue Code. Rather it is found in 31 U.S. Code § 5314. Interestingly the statute authorizes the Treasury Secretary to create the rules and reporting thresholds. The relevant Treasury regulation is 1010.350 and is found here.

The history and law of FBAR is found in the article from the American Expat Financial News Journal which features a video of John Richardson and Virginia Law Torre Jeker discussing Mr. FBAR.

A number of blog posts discussing FBAR is available here.

If you wish advice on your specific situation, feel free to book a consultation with me:

https://calendly.com/renounceuscitizenship

Part 1: The University Of Washington “Low Income Tax Clinic” And A Canadian Student

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Prologue

This is the first of two blog posts (Part 1 and Part 2) that discuss the University of Washington Low Income Tax Clinic report referencing a dual Canada/U.S. citizen student living and working in Canada.

Part 1 (this) will discuss the report generally and how the circumstances actually trigger the Canada/U.S. tax treaty. Think of it! A few thousand dollars of summer income received by a Canadian student implicates an international tax treaty. Only in America!

Interestingly, the specific factual circumstances include an example of what happens when a U.S. citizen living outside the United States receives a U.S. inheritance that generates U.S. source income. This is a concern for many Americans abroad. It is a complicated area.

Mostly Part 1 will discuss the “LITC” Report. Specifically how the “LITC” viewed the issue. How they incorrectly tried to apply the U.S. Canada tax treaty (apparently) without regard to the “saving clause” which is included in all U.S. tax treaties.

The report seems to say that the taxpayer filed a U.S. tax return for the 2021 tax year and filed to include income which (because of information reporting) the IRS was aware of. This should be of concern to Americans abroad generally. I will discuss this aspect more fully in Part 2.

Part 2 will discuss the specific problem of a U.S. citizen abroad inheriting (or anticipating inheriting) U.S. assets (whether income producing or not). I am making this a separate post because it is a complicated topic. The most rational response to this situation is highly dependent on your factual situation.

Part 2: Inheriting From America AKA Anxiety On Steroids – Retain Or Renounce U.S. Citizenship? What About U.S. Tax Compliance?

In any case, we begin with Part 1 …
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IRS Ends “Delinquent FBAR Submission Procedures” Leaving No “Guaranteed Penalty Free Option”

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Introduction

Podcast 1 – July 2, 2026

Podcast 2 – July 17, 2026

On June 26, 2026 I did a presentation in London, UK titled “The Life And Times Of Mr. FBAR”. Obviously, the presentation included a discussion of how to file delinquent FBARs without triggering an FBAR penalty.

That discussion included references to both:

– “Streamlined filing procedures“; and

– “Delinquent FBAR submission procedures”

On June 30, 2026 the “Delinquent FBAR submission procedures” option was removed from the IRS site. It appears that this specific procedure is no longer an option. Notably, the “Delinquent FBAR submission procedures” option included the promise that:

The IRS will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.

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December 2011 – IRS FS-2011-13: Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.

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Purpose

The purpose of this post is to archive the 2011 IRS Fact Sheet for U.S. Citizens or Dual Citizens Living Outside the U.S.

The summer of 2011 was a particularly difficult time for U.S. citizens living outside the United States. Many of them were learning about U.S. citizenship taxation and FBAR for the first time. Many made the mistake of entering the IRS 2011 Offshore Voluntary Disclosure Program (“OVDI”).

Finally, in December of 2011 the IRS provided minimal direction on what Americans abroad were required to do.

I am in the middle of preparing a presentation on “The Life And Times Of Mr. FBAR” and have been considering “civil” FBAR penalties under 31 U.S.C. 5321. Specifically, what are the factors that the IRS considers in determing whether an FBAR violation is willful or non-willful. I remember this 2011 directive as including some interesting considerations. It taok me some time to track this down. Hence, I though I would write a short post to ensure that:

“Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.
FS-2011-13, December 2011”

was stored on this site. Hence, this post.

Of particular interest are the following paragraphs:

“6. Possible penalties for failure to file FBAR

If you fail to file an FBAR, in the absence of reasonable cause, you may be subject to either a willful or non-willful civil penalty. Generally, the civil penalty for willfully failing to file an FBAR can be up to the greater of $100,000 or 50 percent of the total balance of the foreign account at the time of the violation. See 31 U.S.C. §5321(a)(5). Note that this penalty is applicable only in cases in which there is willful intent to avoid filing. Non-
willful violations that the IRS determines are not due to reasonable cause are subject to a penalty of up to $10,000 per violation. There is no penalty in the case of a violation that IRS determines was due to reasonable cause. For more information about the FBAR penalty, see Form TD F 90-22.1. For information about the reasonable cause exception to the FBAR penalty, see IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR).

Example 3: Same facts as Example 1, except that the highest balance in Taxpayer’s checking account exceeded $10,000 and, after reading recent press and thus learning of his FBAR filing obligations, Taxpayer filed an accurate, though late, FBAR. The FBAR was accompanied by a written statement explaining why Taxpayer believed the failure to file the FBAR was due to reasonable cause. The IRS will determine whether the violation was due to reasonable cause based on all the facts and circumstances. Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case. Since
the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.

Factors that might weigh in favor of a determination that an FBAR violation was due to reasonable cause include reliance upon the advice of a professional tax advisor who was informed of the existence of the foreign financial account, that the unreported account was established for a legitimate purpose and there were no indications of efforts taken to intentionally conceal the reporting of income or assets, and that there was no tax
deficiency (or there was a tax deficiency but the amount was de minimis) related to the unreported foreign account. There may be factors in addition to those listed that weigh in favor of a determination that a violation was due to reasonable cause. No single factor is determinative.

Factors that might weigh against a determination that an FBAR violation was due to reasonable cause include whether the taxpayer’s background and education indicate that he should have known of the FBAR reporting requirements, whether there was a tax deficiency related to the unreported foreign account, and whether the taxpayer failed to disclose the existence of the account to the person preparing his tax return. As with factors that might weigh in favor of a determination that an FBAR violation was due to reasonable cause, there may be other factors that weigh against a determination that a violation was due to reasonable cause. No single factor is determinative.

Current IRS procedures state that an examiner may determine that the facts and circumstances of a particular case do not justify asserting a penalty and that instead an examiner should issue a warning letter. See IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR). The IRS has established penalty mitigation guidelines, but examiners may determine that a penalty is not appropriate or that a lesser (or greater) penalty amount than the guidelines would otherwise provide is appropriate. Examiners are instructed to consider whether compliance objectives would be achieved by issuance of a warning letter; whether the person whocommitted the violation had been previously issued a warning letter or has been assessed the FBAR penalty; the nature of the violation and the amounts involved; and the cooperation of the taxpayer during the examination.

Example 4: Taxpayer is a United States citizen who lives and works in Country B as a computer programmer. Taxpayer has checking and savings accounts with a bank that is located in the city where he lives. The aggregate balance of the checking and savings accounts is $50,000 during the tax year. Taxpayer complied with Country B’s tax laws and properly reported all his income on Country B tax returns. Taxpayer failed to file federal income tax returns and failed to file FBARs to report his financial interest in the checking and savings accounts. After reading recent press and thus learning of his federal income tax return and FBAR reporting obligations, Taxpayer filed delinquent FBARs, reporting both foreign accounts, and attached statements to the FBARs explaining that he was previously unaware of his obligation to report the accounts on an FBAR. Taxpayer also filed federal income tax returns properly reporting all income and no tax was due. The IRS will determine whether the FBAR violation was due to reasonable cause based on all the facts and circumstances. Taxpayer had a legitimate purpose for maintaining the foreign accounts, there were no indications of efforts taken to intentionally conceal the reporting of income or assets, and no tax was due. Taxpayer’s explanation for why he failed to timely file an FBAR appears reasonable in view of the facts and circumstances of the case.

Since the IRS determined that the FBAR violation was due to reasonable cause, no FBAR penalty will be asserted.”

You can read the FS-2011-13 in its entirety here:

FS-2011-13

It is also discussed here.

John Richardson – Follow me on X.com/Expatriationlaw

“13 Reasons Why” I Committed Citizide By Renouncing US Citizenship By Jane Doe

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13 Reasons Why I Committed Citizide

Note: The following brilliant essay was written by a former client of mine. I originally posted it in 2017 on Medium here. My introductory comments in 2017 are (I think) worth considering. If you want help with deciding whether to renounce U.S. citizenship feel free to reach out.

(Inspired by the television series, 13 Reasons Why)

Hey, it’s Jane. Jane Doe. Settle in because I’m about to tell you the story of my renunciation. More specifically, why I gave up my US citizenship. And if you’re reading this article, you’re probably thinking of doing it too. I can’t expect you to understand exactly how I feel; each person has a unique set of circumstances, a deeply personal mix of conflicting emotions, fears and problems that shape their response. But I can tell you why I did it. Let me start by saying, don’t believe everything you hear.

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Shedding Light On The U.S. Citizenship Tax System And Prospects For Reform In Australia And More: Latife Hayson and Seth Hertz

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Reproduced from SEATNow.org

Introduction and purpose

In the summer of 2025 Latife Hayson of The Interchange, an Australian living in the United STates included an episode about U.S. citizenship taxation. Although mainly from an Australian perspective, the video (and shorts) will be of interest to U.S. citizens living all over the world.

Full Video:

US Expat Tax Explained: Navigating Citizen-Based Tax Traps & the Push for Residency-Based Taxation

Shorts:

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From The OVDI Trauma Of 2011 To The Continuing Trauma Of U.S. Citizenship Abroad Today

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Prologue – August 2011

Today is August 26, 2025. This coming weekend is Labour Day weekend. It was almost 14 years ago to the day that many U.S. citizens (and some former citizens) in Canada and around the world were being pressured to enter into the 2011 OVDI (“Offshore Voluntary Disclosure Initiative”). Those who entered that program, offered a substantial percentage of their wealth to the IRS, to avoid punishment. The punishment would have been for the failure to comploy with laws they had no way of knowing existed. Shockingly, many who entered the OVDI program agreed to penalties that were completely disproportionate to their noncompliance. Interestingly, many who (1) entered the program and (2) used the opt out provision paid little or no penalties.

The OVDI program was predicated on the generation of penalty threats from the IRS and the tax advisers delivering those threats to the individuals impacted. The nature of the threats evolved. Toward the deadline for entering OVDI the IRS offered increased penalty to nonresidents who didn’t know they were U.S. citizens. As noted by Robert Wood on August 11, 2011 writing in Forbes, the IRS agreed that individuals who didn’t know they were U.S. citizens would pay a reduced rate of 5% for the privilege of participating in the OVDI program. Mr. Wood describes this special concession to those who didn’t know they were U.S. citizens as follows:

You are invited to read the complete post on the Isaac Brock Society here.

From The OVDI Trauma Of 2011 To The Continuing Trauma Of U.S. Citizenship Abroad Today

John Richardson – Follow me on X.com @Expatriationlaw

Sacred Trust: Counseling Americans Abroad Through The Trauma Of A FATCA World

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Introduction:

Much of living as a U.S. citizen abroad is learning to cope with a life of trauma. Posts discussing the trauma are here here, here and here. For Americans abroad, preparing to file a U.S. tax return is a form of trauma.


The U.S. extra-territorial tax, form and penalty regime reminds Americans that they are:

“Subject to certain penalties, for uncertain conduct!

Those who do not file tax returns worry about the consequences of not filing.

Those who do file tax returns worry about the consequences of filing.

Thinking about the issue of trauma, I was reminded of a presentation that I did in 2015 in London, UK. It was titled:

Sacred Trust: Counselling Clients Through The Trauma Of “U.S. Citizenship Abroad” In A FATCAesque World”

(The audience was a group of U.S. tax professionals. I am not sure that they really understood the message. But, the presentation was a welcome diversion from the usual technical tax talk.)

I had forgotten about the presentation, but was reminded of it today. Looking at the slides, I think I agree with everything I said in 2015. If anything, it has gotten worse!

Here is the presentation:

A PDF version is here:

Sacred Trust – Counselling Clients Through the “Trauma of U.S. Citizenship Abroad” in a FATCAesque world – Toronto – February 2015 1

AI Generated Podcast generated from the 2015 presentation

John Richardson – Follow me on X.com @ExpatriationLaw

U.S. Citizens In Canada And Abroad: The Trauma Of Organizing Information For Your U.S. Tax Return

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Prologue

As an older post I wrote confirms, Americans abroad are subject to special provisions and those special provisions include a number of information returns!

Forms required by #Americansabroad 101 – The Explanation

My reason for writing and the purpose of this post

I am not a tax preparer. I am an expatriation lawyer. In this.capacity, I either:

– see U.S.tax returns prepared by a tax preparer; or

– discuss the necessity of U.S. tax compliance when a person wishes to become U.S. compliant through either the IRS streamlined or the IRS Relief Procedures Programs.

Americans abroad have many reasons for wishing to be U.S. tax compliant. In many cases it is associated with expatriation. In some cases it is part of estate planning (in many cases it is better to die without being a U.S. citizen). In. some cases it is to renounce and NOT create barriers to inheritance for U.S. citizen children. In some cases it is because they are likely to inherit U.S. income producing assets. In some cases it is because they fear noncompliance. In some cases (regardless of fears of penalties) they believe in. compliance with the law. The point is that U.S. tax compliance (it’s a huge industry) is an important part of people’s lives.

Regardless of one’s view of the U.S. citizenship tax regime, there are large numbers of Americans abroad who either attempt to meet their annual filing obligations or who desire to meet those obligations.

In this context I offer two important (I think) thoughts:

First, forms and tax returns are dangerous things and should be filed correctly. If you are going to file, you might as well do it correctly.

Second (and more importantly), for U.S. citizens abroad the filing of U.S. tax returns is a major cause of significant trauma in their lives. It is NOT a question of filing a. 1040 that just reports “foreign income”. It is, because of the large number of penalty-laden information returns, an accusation that is based on a presumption of “wrong doing”. (U.S. residents and their tax preparers who think this is hyperbole, just try living as a tax compliant American abroad!)

Therefore, the tax compliance question for Americans abroad is a question of how do they mange their trauma. The issue is how do they manage the tax filing issue in a way that minimizes the associated trauma. Are they likely to be audited? I don’t think so. Are they likely to think about the possibility of audit and penalties? Yes, many of them do. Furthermore, learning about previous filing mistakes is – for many people -incredibly traumatic.

The purpose of this post is to help with the management of trauma.

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The Organization Problem – How to read this post …

Identifying the information that is needed.

I have noticed that Americans abroad have difficulty organizing their information. Remember, tax preparers are not mind readers. They know very little about you. The simply process the information you provide. Sure, they have questionnaires (with varying degrees of detail). That said, I think it would be helpful to provide an overview of what it means to file a U.S. tax return, what information is relevant and how to think about retrieving that information. Those of you who wish to renounce U.S. citizenship will want to be in a position where you can certify five years of U.S. tax compliance.

I have written this post primarily from a Canadian perspective (I live in Toronto, Canada.) Although the information is generally applicable to all U.S. citizens living outside the United States, some of the information is specific ONLY to Canada. So, please don’t be lazy. Get informed! Stay informed!

While providing an overview, the information in this post cannot be complete. It is written for the average person, with a simple life and mainstream investments that are easily understood and characterized.

Finally, if you are filing U.S. taxes abroad for the first time, I suggest you should start with the following simple question:

“What would my U.S. tax tax return contain in terms of forms, schedules, etc.?”

In any case, I am writing this post because …

Yesterday I compared the U.S. tax return and the Canadian tax return of a U.S. citizen living in Canada. The Canadian return was 14 pages. The U.S. return was 59 pages. The person had a very simple life (retired and living off the usual pensions). He did NOT owe any U.S. taxes. That said, he was NOT compliant with his U.S. tax filing obligations. The reason was that his “foreign assets” were not reported properly on Form 8938. I suspect that this person had no idea how to properly identify and organize the foreign financial asset information to properly transmit it to his U.S. tax preparer. This is perfectly understandable. Assuming no Canadian Controlled Private Corporation (a presumptive instrument of tax evasion from a U.S. perspective), or other controlled foreign corporation, most tax filers will be required to file:

– FinCEN 114 AKA FBAR

– Form 8938

– Possibly Forms 3520 and 3520A (make sure that you really are dealing with a Trust or have received a foreign gift)

– and possibly more

This post is to provide very simple advice on how to organize this information to provide to your tax preparer.

U.S. tax filings are more about the disclosure of information than about the calculation of tax

Generally, you can assume that ANY and ALL financial accounts and financial assets (brokerage accounts, pensions, individual shares in non-U.S. corporations) must be reported. The reporting issue is distinct from the tax issue.

Foreign real estate owned directly by Americans abroad is NOT (at present) subject to separate reporting (although income earned from them is taxable).

Preparation for the filing of a U.S. tax return should be viewed as four categories of. tasks:

Category A – Identifying The Relevant Information

Category B – Deciding How That Information – In Terms Of The Relevant Forms – Is To Be Reported

Category C – Reporting The Information On The Relevant Forms

Category D – Deciding Whether Any Information Returns Must Be Filed Even If A Tax Return Is Not Required (For example: Form 5471, 8621 and Form 3520 and Form 3520A may have a filing requirement even if a 1040 is not required!)

Category E – Does Your Country Of Residence Have Rules Requiring The Reporting Of Foreign Assets (similar to FBAR, Form 8938, etc.)?

Be careful!!

Canada (and other countries) have very strict rules governing the reporting of foreign assets.

Once these three tasks have been. completed, one is ready to place the income on the actual tax return (1040 or 1040NR) and Schedules.

What follows are the ten steps that should prepare you to give your information to your tax preparer.

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Some IRS Medic Livestream Videos – 2026 to 2023

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Introduction:

Over the years I have been a guest on the IRS Medic Youtube Channel a number of times. The topics have been varied and of relevance to Americans abroad. I thought I would collect “some” of the videos in one post. If you scroll down, I expect that you will some topics of interest to you. Many if not most of the topics have included written presentations in PDF format. I will add those when I have the time and am able to locate them.

If after watching any of these, if you want to schedule a consultation to discuss your situation:

https://www.calendly.com/renounceUScitizenship

ExpatriationLaw.com

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Schwarzbaum – FBAR Penalties ARE Subject To The “Excessive Fines Clause”

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Prologue – U.S. Citizenship And The Tax, Form and Penalty Club

U.S. citizens are members of the world’s premier “tax, form and penalty club”. The law of Mr. FBAR is a testament to the American penchant for imposing penalties for various “form crimes”.

One of most interesting issues is whether there are constitutional limits to the penalties that can be imposed for failing to file an FBAR. The eighth amendment of the U.S. constitution does include the prohibition on “Excessive Fines”. Can a fine that might exceed the value in the unreported account be consistent with the “Excessive Fines Clause”? This is one of the most significant social and legal issues in 21st Century America.

The Supreme Court of the United States refused to hear an appeal from Monica Toth’s FBAR penalty. In her petition to the Supreme Court, she asked the court to consider whether FBAR penalties might violate the “Excessive Fines Clause”. The court declined to hear the Toth FBAR case. Justice Gorsuch wrote a powerful dissent in which he invited lower courts to consider the issue. In 2024, the Eleventh Circuit obliged and ruled that FBAR penalties ARE subject to the “Excessive Fines” clause in the eighth amendment. The litigant was none other than Mr. Isac Schwarzbaum – a true pioneer in the development of FBAR jurisprudence.

Isac Schwarzbaum – Discussion In Various Podcasts

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