Fascinating discussion – You are the victim of #FATCA Hunt – What to do if the #IRS comes knocking outside the USA http://t.co/5LWNBvnrbR

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 19, 2014

FATCA Hunt Begins
“FATCA Hunt” – the hunt for U.S. persons (whatever that is) began on July 1, 2014 which is “Canada Day”. Although both the definition of “U.S. person” (and whether one meets the definition) is not always clear, the search has begun. The level of FATCA awareness has begun. Some organizations are actively warning people that “U.S. Personness” matters. (The purpose of the warning is presumably to encourage people to “come clean“ and deal with their U.S. tax situations.) In some cases, there is no particular warning – just a letter indicating that they are suspected to be a “U.S. person”.  Often one must prove to the institution sending the letter that one is  not a U.S. person.

A Canadian wealth management company for doctors asks: "Are you a U.S. person?" http://t.co/ipc4Xn3Gs5 If so, consult a lawyer!

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 22, 2014

The above tweet references a notice from a Canadian Wealth management firm for doctors after warning that they are required to (and will) report all U.S. persons to the IRS (via the CRA) state:

Serious penalties for non-filing may apply even for those who are unknowingly non-compliant about their reporting obligations. The penalties for wilful non-compliance can be severe, including imprisonment.
Filing and reporting obligations for U.S. persons exist whether or not any tax—including income, estate, gift or generation-skipping transfer tax—is owed to the United States and even if Canadian tax has always been paid. Filing may reveal that tax is owed, with potential ramifications for late payment. Where a U.S. person lives or works in the world, or where their assets are located, does not alter their reporting obligations.
If a client believes they may be a U.S. person, MD recommends that they immediately consult a U.S.-licensed attorney—with whom a client’s conversation will be privileged—with expertise in tax and/or immigration to better understand what it may mean for the client and their family. Employees of the MD group of companies are not U.S.-licensed or permitted to make any determination of a client’s U.S. status or filing obligations.
A U.S.-licensed professional with this specific expertise is often required to make an accurate determination of whether someone is subject to the U.S. tax system and associated filing obligations. A U.S.-qualified accountant may also be involved in the preparation and filing of tax and information returns.

(If you don’t have enough problems in life, you must now worry about whether you are a U.S. person.) As the Rick Mercer FATCA video humorously (to all but “U.S. persons”) suggests:

Are you or have you ever been a U.S. citizen" It's time to check! http://t.co/kgMunR6WVs

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 29, 2014

Are you a U.S. Person? It’s time to check!

If yes, then you are a “tax cheat” by birth!

Needless to say, I have begun receiving calls from people who are in a state of panic. They may have received a warning from their employer or professional association. They may have received “FATCA letters” from a “bank located outside the United States”. Regardless of the specific bank, you are receiving the letter because the bank believes that you may be a U.S. citizen (or other U.S. taxpayer) and that you have a financial account at their bank located outside the United States.The bank is telling you that they WILL be reporting the existence of your account to the IRS (directly or indirectly) unless you certify that you are NOT a U.S. citizen or other U.S. taxpayer.
FATCA Hunt – The Response
Scary stuff indeed! The purpose of this very GENERAL post is to explain in a very GENERAL way what is happening and what this may or may not mean to you. Obviously a blog post is not and cannot be legal advice. I do want to demonstrate that the situation is more nuanced than much of the information on internet blogs suggests. The situation is confusing. It takes time to understand. It’s easy to panic. There are plenty of people who are happy to take advantage of your fear and confusion.
U.S. tax law is NOT enforced by the IRS as much as it is enforced by the tax compliance community.
So, please be patient. Bear with me. I will identify a number of  relevant questions and possible ways to get answers. My goal is to help you “get your bearings” before you decide on your response. This post is best read along with my earlier post titled:
“What you should consider before consulting a lawyer“.
1 – Q. What individuals are U.S. taxpayers? A. U.S. citizens, Green Card Holders and those who meet the substantial presence test

"Are you or have you ever been a U.S. citizen? Sometimes it's not so easy to know in a #FATCA world.
http://t.co/Lr7cc5KUlG

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 19, 2014

Focusing only on individuals,”U.S. Persons” are U.S. taxpayers. They INCLUDE U.S. citizens and Green Card holders regardless of where they live in the world. (I am not going to define the “substantial presence test” in this post.)
It is important to understand that whether one is a “U.S. person” is defined by and only by U.S. law! Therefore, one must look  to U.S. law to determine ones tax status. Note also that different countries can define the same word differently.
Who is a U.S. citizen?
U.S. citizenship law is complex. We can start with two basic presumptions.
A. If you were born in the United States you are a U.S. citizen unless you have relinquished U.S. citizenship pursuant to U.S. law as it currently exists or has it has existed over the years.
B. If you were NOT born in the United States, you are NOT a U.S. citizen without the proof of additional objective facts (generally related to the citizenship and residence of your parents).
It is important to note that U.S. citizenship law has evolved over the years. U.S. citizens have the benefit or bear the burden of laws  as they have existed at the time the relevant act/conduct took place.
If you are a U.S. citizen you are required to file U.S. tax returns. If you are NO LONGER a U.S. citizen, you may (in some circumstances) still be subject to U.S. taxation until you have notified the State Department of your relinquishment of U.S. citizenship. The reason is that since 2004 U.S. law has made a distinction between U.S. citizenship for immigration and nationality purposes (think State Department) and U.S. citizenship for tax purposes (think Treasury/IRS).
Green Card Holders

Green Card Holders are still taxable as U.S. persons until they file Form I-407 http://t.co/CxpD7nfXHe There is no DIY Green Card abandoment

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 19, 2014

 Conclusion:
Americans abroad are recently learning that they have always been required to file U.S. tax returns. Green Card Holders are learning that they remain taxable as U.S. persons, (wherever they live in the world) until they formally abandon their Green Card.
Since U.S tax laws apply to “U.S. persons” which includes, U.S. citizens and Green Card Holders it’s important that you clarify your U.S. citizenship status or whether you are taxable as a Green Card holder.
2 – U.S. citizens and Green Card holders are subject to U.S. tax wherever they live in the world. What are the laws that govern the taxation of “U.S. persons” (U.S. citizens and Green Card Holders)?
The Internal Revenue Code of the United States is passed by Congress and administered by the IRS. The IRS is interested in information about whether U.S. taxpayers are:
1. Reporting their income properly to the IRS; and
2. Complying with the rules for providing the U.S. with the “information returns” required under U.S. law.
Although it is perfectly legal for U.S persons to have financial accounts outside the United States, both the income from the accounts and the existence of the accounts may (and probably must) be reported to the United States.
3 – What determines the income that must be reported to the IRS?
U.S. citizens  and Green Card holders who do NOT live in the United States are subject to the same tax rules are U.S residents. This means that (with the exception of the Foreign Earned Income Exclusion) that all income and activities outside the United States are governed by the same tax rules that apply to income and activities in the United States. The tax status of income or an activity in your country of residence is irrelevant. This leads to very unexpected and very unfair results.
One result of U.S. citizens abroad being subject to the same tax rules as U.S. residents is that U.S. citizens abroad are required to live their lives the way that U.S. residents would. This means that the financial lives of U.S. citizens abroad are deemed “foreign”.  The result is that the lives of U.S. citizens abroad are subjected to “heightened scrutiny” and “penalties”.
The retirement planning options of U.S. citizens abroad, using the retirement planning vehicles in their country of residence, are very limited.
4 – What “Information Returns” are required to be reported to the IRS?
I once heard a tax lawyer claim that he had identified as many as 45 “information returns” that Americans abroad may be subject to. But, in the interests of keeping this simple the most common information returns include BUT ARE NOT LIMITED TO:
FBAR (Now called FinCen 114) which is filed with “Financial Crimes”. (Yes, you read right! Financial Crimes). The rules governing FBAR are complicated. What you must know is that:
– the FBAR must be filed no later than June 30 for the previous year
– You are required to file an FBAR if the aggregate value of all your non-U.S. financial accounts (anywhere in the world) exceeds 10,000 U.S. dollars at any time during the year. This means that you may or may not be required to file the FBAR (although in practice must U.S. citizens abroad will be required to file FBARs).
The IRS regards unfiled FBARs as “Delinquent FBARs”. As you might expect there are significant penalties for the failure to file FBARs. Before having a “heart attack” please note that FBAR penalties may be abated if the taxpayer can show “reasonable cause”.
It should be noted that the FBAR requirement is NOT found in Title 26 (Internal Revenue Code) but in Title 31 (Financial Crimes).
FATCA 8938 – Report of Specified Foreign Assets
This requirement has been in effect since 2011. There are thresholds and the threshold depends on:
– whether you live inside or outside the United States; and
– your IRS filing status (as always “married filing separately”) is dealt with most harshly.
FBAR and FATCA Form 8938 are different but they do have significant points of overlap. You will find the following information from the IRS to be helpful:

Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”?
irs.gov/Businesses/Corporations/Do-I-need-to-file-Form-8938,-%E2%80%9CStatement-of-Specified-Foreign-Financial-Assets%E2%80%9D%3F
Comparison of Form 8938 and FBAR Requirements
irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

Although the FBAR and FATCA 8938 forms are the most common “information returns” for Americans abroad, other common information returns INCLUDE:
5471 – Information return for Foreign Corporation (this includes corporations created in  your country of residence)
3520 – Information return for a “Foreign Trust” (this may include various pension and retirement plans in your country of residence)
3520A – related to the 3520
If these returns have not been filed, the IRS will regard these as “Delinquent Information Returns”. As you might expect there are significant penalties for the failure to file these returns. Penalties for the failure to file “Information Returns” may be abated if the taxpayer can show “reasonable cause”.
The U.S. Government requires that almost all details of the financial lives of Americans abroad be reported to the IRS.
5 – I have never heard of these requirements! Q. Why am I getting letters from my bank all of a sudden? A. It’s because of FATCA

Are #Americansabroad #Offshore tax cheats? Watch: #FATCA The Genesis http://t.co/gy3QV3yrVh

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 19, 2014

In 2009 the IRS discovered that a small number of U.S. taxpayers were neither declaring their income nor reporting the existence of their “foreign” financial accounts. As a result a small number of Congressmen (Senators Levin, Baucus and Representative Rangel) drafted FATCA. Congress passed FATCA the “Foreign Account Tax Compliance Act”. FATCA was signed into law by President Obama in March of 2010. FATCA was a “stowaway” to an unrelated piece of legislation called the “Hire Act” (“Hiring Incentives To Restore Employment”). My guess is that few Congressmen even knew what they were signing.
At the risk of oversimplification FATCA has two broad requirements:
1. Requirements For Non-U.S. Banks – “Non-U.S. AKA Foreign Financial Institutions” are required to search for customers that are “U.S. Persons”. Any Foreign Financial Institution that does NOT search for and locate U.S. persons will have 30% of all U.S. dollar transfers (regardless of reason) to that bank confiscated and;
2 Requirements for U.S Persons – All U.S. Person taxpayers must report anything and everything “foreign” to the IRS. FATCA affects primarily  U.S. citizens abroad. To put it another way:
FATCA is for the purpose of enforcing U.S. citizenship-based taxation on Americans abroad.
You have received a letter because a “Foreign Financial Institution” is afraid that they will be sanctioned by the U.S. Government if they don’t first identity you and then report you to the IRS.
Those interested in learning more about FATCA may be interested in viewing the videos from the FATCA Forum that took place in Toronto in December of 2012. (Note that because “FATCA Forum” took place in 2012, that it predated  Canada’s FATCA IGA.)
6 – What kinds of people are receiving FATCA letters?
First of all you should NOT panic. Most people receiving FATCA letters have no idea what is going on. Some recipients of FATCA letters are Americans abroad. Some live in the United States. Some have reported interest income from their foreign financial institutions on their 1040. Some have not reported the interest. But, VERY FEW are aware of the FATCA and FBAR reporting requirements! If you have received a letter from a foreign financial institution asking for information you are most definitely NOT alone. You should not panic.
Not all recipients of FATCA letters (and I suspect very few) have intentionally done anything wrong. Most of those who have failed to comply with U.S. laws were NOT aware of the existence of the laws.
If you receive a “FATCA letter” you should use this as an opportunity to fix any problems related to your having financial accounts outside the U.S. Some of  you will be U.S. residents (who may have lived abroad) and some of you are U.S. citizens living abroad.
7 – How are Americans abroad responding to FATCA?
FATCA is and is understood to be:
A. Highly intrusive; and
B. Based on the assumption that Americans abroad are avoiding U.S taxation.
As one financial planner explained, the application of the FATCA rules to Americans abroad is absurd.
Many Americans abroad are responding by renouncing their U.S. citizenship. That said, it is time consuming, complicated and expensive to renounce U.S. citizenship. The renunciation of U.S. citizenship includes the following three levels of financial cost:
(i) The costs of a total of 6 years (5 years prior the year of renuncation plus the year of renunciation) of tax compliance and information returns
(ii) The cost of any back taxes and penalties
(iii) A $2350 administrative fee
(iv) The possibility of having to pay an “Exit Tax” (which can be the biggest problem).
As you can see, there are a number of Americans abroad who can neither afford to retain U.S. citizenship nor afford to renounce U.S. citizenship.
8 – Are you in compliance with applicable U.S. laws? (Remember to check the monetary thresholds for FBARs and FATCA 8938)

A.  Title 26 of U.S. Law = The internal Revenue Code:
When it comes to “foreign” (AKA “offshore”) accounts. You will remember that the Internal Revenue Code requires you to (1) report the income and (2) to report the account (Forms 8938, 5471, 3520, 3520A, etc).  The obligation to report the income exists independently of the obligation to report the account.
B. Title 31 of U.S. Law = The FBAR (Foreign Bank Account Report) Rules
Note that the requirement to file the FBAR is in addition to and separate from the requirements in Title 26 (The Internal Revenue Code).
Title 26 (1040’s – FATCA 8938) and Title 31 (FBAR) – A Chart of  Compliance Possibilities
What follows is a chart of describing the various permutations of compliance. Some initial comments:
1. The chart applies to both U.S. residents and U.S. persons abroad. The requirements of Title 26 and Title 31 apply to all U.S. taxpayers. In practical terms they are more likely to affect U.S. persons abroad.
2. I am including ALL “International Information Returns” in the category of 8938. These include but are not limited to: 5471, 3520 and 3520A. If any of these information returns has NOT been filed then you would not be “8938 Compliant”.
3. U.S. Residents: I assume that most U.S. residents do file 1040s. They would be subject to the “International Information Return” requirements only if they have “foreign accounts” and interests. This includes U.S. residents who have lived outside the U.S. and still have their “foreign financial accounts”. Only a small percentage of U.S. residents have “foreign financial accounts”. Therefore, very few U.S. residents are aware of and/or affected by these rules. A high percentage of U.S. residents affected by these rules are “Green Card” holders who are simply not aware that they must report accounts in the country they came from.
The group punished most severely for violations related to “foreign financial accounts” are U.S. residents without any past connection to the country where the account is located. For this group of people, the thinking appears to be:
The only reason to have the “foreign financial account” is to avoid or evade U.S. taxation.
4. U.S. Citizens and Green Card Holders abroad: The United States is the only advanced country that uses a system of citizenship-based taxation. For this reason, very few “U.S. citizens abroad” have been aware of their U.S. tax and reporting obligations.
Furthermore, we must consider what is meant by “U.S. citizens abroad”. Is this defined from the perspective of the U.S. government? Is this defined from the perspective of the individual? Is this defined from the perspective of the country where where the individual is residing? The answer is that one’s status is defined by and only by U.S. law.

There are individuals that the U.S. government would define as “U.S. citizens” who:
– do NOT agree that they are U.S. citizens because they have performed a “relinquishing act” under applicable U.S. laws;
– do NOT even know that they may be U.S. citizens because they have never lived in the United States
– are citizens and residents of countries that do NOT allow multiple citizenships.
To put it another way: one’s status as a U.S. citizen is NOT always clear.
But, assuming you really are a “U.S. Person”
A chart of compliance possibilities for “U.S. Persons” with Foreign Accounts:
Income from account reported    8938 Filed (if applicable)   FBAR Filed (if applicable)
Y                                                          Y                                            Y  –      No IRS Problems
N                                                         Y                                            Y  –      Hard to believe
Y                                                          N                                           Y  –      D*
N                                                         N                                           Y  –      D*
Y                                                          Y                                           N –       F*
N                                                         Y                                           N –       F* – Hard to believe
Y                                                         N                                           N –       D* F*
N                                                        N                                           N –       D*F*
D* = Delinquent Information Returns (8938, 5471, 3520, etc.)
F* = Delinquent FBARs
9 – If you are a U.S. citizen or Green Card holder NOT in compliance with U.S. laws governing “foreign financial accounts” what should you do? How should you respond? What can  you do to “fix the problem”?

The short answer is that you should fix the problem. The question is how to best achieve this. There is NO one answer for all people. If you call a lawyer and the lawyer advises you before making an effort to understand the “facts governing your situation” – move on to another lawyer!
The “facts governing your situation” INCLUDE (but are certainly NOT limited to):
– are you a U.S. resident or U.S. citizen or Green Card holder living outside the United States?
– what has been your compliance history in general?
– if you are a U.S. citizen abroad have you been filing 1040s? If not, why not?
– where are the “foreign financial accounts” located? In your country of residence or elsewhere?
– where did the money in the “foreign financial accounts come from?” Was the tax paid on the money?
Now, there are many facts that matter. I have listed a few to show you that people are different. This means that there is NO one way to fix the “foreign financial account problem (if you have one).
One can consider fixing “foreign financial account” problems with either  (1) “IRS Created” compliance (amnesty) programs or (2) by simply filing amended returns (complying with the directive of the the law). The decision should be made with the help of a competent adviser.
10 – “IRS Created Programs” for “fixing foreign financial account” problems
The problem defined:
You are a U.S. citizen or Green Card holder who has discovered that you are “delinquent” in filing one or more of your 1040s, FATCA 8938s or FBARs.
Guidance from the IRS:
Let’s begin with what the IRS advises to fix the “foreign financial account problem”.  The IRS has publicly listed four options for how to fix various permutations of the “foreign financial account problem”. These are:
A. Offshore Voluntary Disclosure Program – AKA “OVDP – Not appropriate for the vast majority of people
irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program
The description includes:

The IRS is offering taxpayers with undisclosed income from offshore accounts another opportunity to get current with their tax returns. The 2012 OVDP has a higher penalty rate than the previous programs, but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution.

As one commenter put it:

‘‘OVDP is designed for willful evaders — it always has been. The streamlined procedures are designed for the non- willful.’’

B. Streamlined Compliance – A pre-packaged way to “clean up” past compliance problems
irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures
The description includes:
The streamlined filing compliance procedures describe below are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations with

• a streamlined procedure for fling amended or delinquent returns, and
• terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and
• terms for resolving their tax and penalty obligations.

Many practitioners have been critical of the Streamlined Compliance program. Most of the criticisms revolve around the requirement to certify that the omissions were “non willful”. A reference to some of the most interesting posts on the 2014 Streamlined Compliance procedure is incorporated into the post  here.
Note also that Streamlined does NOT appear to be available to U.S. citizens who:
1. Live outside the U.S. and spend more than 35 days annually in the U.S.; and
2. Have NOT been filing U.S. tax returns.
In other words, “Streamlined Compliance” does not appear to be available to U.S. citizens who think of themselves as “Canadian Snowbirds”.
C. Delinquent FBAR Submission Procedures – F*
irs.gov/Individuals/International-Taxpayers/Delinquent-FBAR-Submission-Procedures
The description includes:

Taxpayers who do not need to use either the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:

• have not filed a required Report of Foreign Bank and Financial Accounts (FBAR) (FinCEN Form 114, previously Form TD F 90-22.1),
• are not under a civil examination or a criminal investigation by the IRS, and
• have not already been contacted by the IRS about the delinquent FBARs

should file the delinquent FBARs according to the FBAR instructions.

The IRS makes clear that not all “foreign financial account” problems need to be fixed by using OVDP or Streamlined.
D. Delinquent International Information Return Submission Procedures – D*
irs.gov/Individuals/International-Taxpayers/Delinquent-International-Information-Return-Submission-Procedures
The description includes:

Taxpayers who do not need to use the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:

• have not filed one or more required international information returns,
• have reasonable cause for not timely filing the information returns,
• are not under a civil examination or a criminal investigation by the IRS, and
• have not already been contacted by the IRS about the delinquent information returns

should file the delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file.

Once again, the IRS makes clear that not all “foreign financial account” problems need to be fixed by using OVDP or Streamlined!
11. Commentary from professionals and comments on the “IRS Created” compliance options
If you google the terms “OVDP”, “Streamlined”, “FBAR”, etc. you will see numerous articles on how to fix “financial foreign account” problems. I referenced a number in a previous post.
Any commentary must include both professional commentary and comments.
On OVDP
Be very wary of advice that suggests OVDP without a thorough examination of your facts. Consider the following comments from two experienced lawyers:

Before entering #OVDP one should read the following comment from one lawyer http://t.co/t9jedBy6qt – The "V" in OVDP stands for voluntary!

— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 19, 2014

I refer you to the following four Robert Wood articles (make sure that you read the comments)! They were written at different times and include very rich and insightful comments.
They are:
– June 9, 2014 – Offshore Bank Letters FATCA – Are there any choice left? (Written before the June 18, 2014 amendments to the Streamlined program) In addition this article was written largely in response to the issue of U.S. citizens in Switzerland who are caught in the “cross fire” of the IRS OVDP program for banks – a topic that is beyond the scope of this post.)
– June 30, 2014 – What the IRS Calls Willful May Surprise You (Written in response to the June 18, 2014 changes to Streamlined Compliance which introduced the required certification of “non willful”)
– September 18, 2014 – Which IRS amnesty program is right for you?
Note that this article (which generated a large number of interesting comments) was also referenced on the Isaac Brock Society. The best part of this article is that Mr. Wood explains important differences in the application of the programs (rates of penalties, composition of penalty base, etc. The point is that there MAY be instances in which the penalties are less in OVDP than in Streamlined. It is very very very important to analyze your situation in terms in how the program would apply in your particular situation.
For example the article includes:

If you are not worried about the willfulness element on your facts, comparing the 27.5% OVDP penalty and the 5% Domestic Streamlined penalty seems like a no-brainer. Yet as it turns out, there are differences in how the 5% and the 27.5% penalties are computed. This isn’t apples to apples.
First, the Domestic Streamlined penalty is calculated on the year-end account balances and year-end asset values. This is different from the OVDP which typically requires you to take the highest value of the account during the year. See 2014 OVDP FAQ#31.
More important than what goes into the penalty is what you can take out. For the 27.5% OVDP penalty, you can typically remove accounts that are tax compliant, but were not reported. 2014 OVDP FAQ#45. The Domestic Streamlined base is broader. For the 5% Domestic Streamlined penalty, you must include all accounts that were either unreported or tax non-compliant.

– October 17, 2014 – IRS explains how to come clean on offshore accounts – (Based on the October 2014 IRS clarifications for managing international tax and offshore compliance problems)
12. Obeying the law – filing amended tax returns outside the “IRS Created” programs
Practitioners tend to focus on the “IRS Created” programs described in “10” and “11” above. Note that the “IRS Created” programs are NOT part of the U.S. Internal Revenue Code. All taxpayers are required to comply with the terms of the Internal Revenue Code.
One is NOT required to use the “IRS Created” programs. (See for example the comment directed to “UScitzen ” in “11” above. (Note also the IRS December 2011 Fact Sheet for U.S. citizens abroad.)
irs.gov/uac/Newsroom/Information-for-U.S.-Citizens-or-Dual-Citizens-Residing-Outside-the-U.S.
As suggested in a recent article by Laura Saunders in the Wall Street Journal:

Although the IRS’s streamlined program offers a welcome option for some people, there are other ways to cope with past noncompliance. Mr. Hodgen and others say that many taxpayers with smaller accounts—say, under $500,000—who weren’t aware of their noncompliance may be able address it simply by amending past tax returns and complying going forward.

13. So what should I do?
The purpose of this lengthy post has been to show you that there is NOT a “one size fits all approach” to fixing “foreign account problems”. Hopefully you will see that an appropriate response must:
– be based on a thorough understanding of your specific factual situation – there are at least four kinds of Americans abroad;
– be based on an accurate understanding of the compliance costs to “fix the problem”;
– be based on an awareness of a wide range of compliance options.
You might consider separating the person who helps you to choose the compliance option from the person who actually does the work to bring you into compliance. This may remove potential conflicts of interest.
In addition, I strongly recommend that you consider how U.S. tax compliance options may interact with your tax obligations in your country of residence! Remember any action you take will affect both your U.S. tax obligations and your tax obligations in your country of residence. Therefore you need counselling from both perspectives.
To put it simply you need to understand all of your compliance costs.
Conclusion:
There is NOT “one size fits all” approach to solving the problems of U.S. citizenship, FATCA and citizenship-based taxation.  This is about much more than tax. It’s about citizenship. The situation of those resident in the U.S. is likely very different from the situation of Americans abroad. The chances are that U.S. residents have been filing U.S. tax returns and Americans abroad have NOT been filing U.S. tax returns. Furthermore, tax compliance for Americans abroad is much more expensive than for U.S. residents. In many cases the cost of U.S. tax compliance for Americans abroad is crippling. In fact, the complexity of U.S. tax rules is such that many Americans abroad simply cannot afford the costs of U.S. tax compliance. How does somebody who can’t afford the costs of being compliant become U.S. tax compliant?
Therefore I suggest that you approach the problem by considering in order:
1. Whether you are or are not a U.S. person.
2. If you are a U.S. person in what respect or respects are you in compliance or non-compliance with U.S. laws. If you owe U.S. tax, how much tax do you owe …
3. What are your logical options to deal with the “non-compliance question”? What is the financial cost of each option? Many Americans abroad simply cannot afford the costs of U.S. tax compliance. Specialized help is usually needed and is often unavailable.
4. If you are  U.S. person who is in non-compliance with U.S. laws, and you wish to fix “past non-compliance” what is the best mechanism to achieve this? In other words, decide on the plan.
5. Once you have decided on the plan, you must implement the plan. If this requires hiring expensive tax preparers or other professionals, get a clear agreement on what is to be done and at what cost.
Be careful. Proceed thoughtfully and with deliberation. Do NOT allow a third party to decide what to do. Make sure that you are comfortable with your chosen plan of attack. Remember that those in compliance with U.S. tax laws you have only two options:
A. Live a life of U.S. tax compliance which will be very difficult to do. The costs of compliance are very high. The restrictions on retirement planning are very real.
B. Renounce U.S. citizenship because of the many aspects of U.S. citizenship-based taxation that are not about tax but are about restrictions on retirement planning and your life in general. In some cases renouncing U.S. citizenship is integral to your retirement planning.
Before you consult a lawyer or tax professional you might reread an earlier post:
What Americans abroad  should consider before consulting a lawyer.
Epilogue – The lawsuits against FATCA are beginning:
There are presently two legal actions that are aimed at FATCA or FATCA IGAs:
1. Canada – The Alliance for the Defence of Canadian Sovereignty has brought a lawsuit against the Government of Canada to invalidate the FATCA IGA that the Government of Canada signed with the U.S. Treasury.
2. United States – Republicans Overseas has announced that it is bringing a lawsuit in the United States to invalidate FATCA.
Both of these lawsuits need funding. If you are an American abroad FATCA does affect you! You are invited to contribute.
The usual warning and disclaimer! Nothing on the internet is or can reasonably considered to be legal advice. Therefore, this post cannot be considered to be legal advice or any other kind of advice. Laws can change without warning!
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Related articles

• FATCA and Extra-territorial Taxation
• FATCA Is Destroying Lives. And It’s Going Global.
• FATCA Enforcement Efforts Continue to Increase