As I have been saying for 3 years now..............

the IRS was always interested first in maximizing revenue through FBAR and Title 26 civil tax penalties and never in compliance . The Service forced many of their intimitaded "customers" to seek legal counsel at great expense, when even most legal counsel could only make somewhat better analyses of the situation, but not perfect because of the uncertainties in application of the concept of willfulness in conjunction with the IRS threats of dire consequences. Many benign actors (well, clearly on the innocence side of the continuum) joined OVDI/P, but because of the IRS continual saber rattling (aka threats), many of those innocents were afraid to opt out, and many lawyers were afraid or unable to counsel them as to their real or realistic risks on opt out.

Those taxpayers who got into the OVDI/P programs early to get right with the IRS will be treated more harshly and subjected to greater processing costs, time, angst, etc., than those who sat back and waited on straight Streamlined or proceeded otherwise (quiet disclosure, etc.). Of course the question arises now why the IRS makes such a fuss about these taxpayers still left in OVDI/P as of today and have not signed a Form 906 to proceed fully under either SDOP or SFOP ? It appears that the IRS wants to keep all of the income tax, penalties and interest for closed income tax years and penalties for open years that it is not entitled to, while giving a partial benefit of the Streamlined program (the 5% penalty applied to innocents, many of whom should owe no penalty).

Further we can guess that it's tougher currently to transition than to apply to the SFCP or SDOP as a newcomer. Of course, a failed transitional request does not imply willfullness. But an inexperienced opt-out examiner is not guaranteed to know this. Which also leads me to this: I don't claim that a failed transitional request guarantees higher penalties after an opt-out (vs. never having applied for a transition in the first place); my claim is that it cannot look better and whether it could be worse depends on the examiner (i.e., it is unknown).
Quote from an IRS agent with regards to QDs :
"The guidance we're getting on quiet disclosures has been extremely harsh . . . Essentially those taxpayers walked past compliance 3 times: They didn't file correctly the first time, they didn't come in under voluntary disclosure, and now they're trying to hide it by slipping it in through an amended return. Don't expect much leniency if we have a quiet disclosure case; agents are being told to be aggressive."

To this day, I still consider the term QD ambiguous: Some practitioners claim it's just amended returns (along with delinquent FBAR's), others claim it also includes a letter outlining RC arguments (which wouldn't make it 'that quiet').
FATCA harks to Section 6038D and Sections 1471-1474 to define, "foreign financial assets", and "financial institutions" for purposes of the Form 8938.
However, the FBAR harks to 31 CFR 1010.350 - REPORTS OF FOREIGN FINANCIAL ACCOUNTS and Section 5314 (specifically 5312(a)(2)) as to what constitutes "other financial accounts" and "financial institutions."
http://www.law.cornell.edu/cfr...
http://www.law.cornell.edu/usc...