FATCA....the threat of forcing many Americans out of the shadows and into the offices of accountants licensed to do U.S. taxes.

As we know these so called "sweeping laws" have many consequences. Their impact is inevitably more far-reaching than lawmakers imagine. They snare the unwitting, and inflict often heavy collateral damage. FATCA is aimed at finding unreported income by taking a peek at virtually every account held by U.S. citizens, anywhere in the world. It’s like dragging a massive net along the ocean floor to catch a handful of shrimp.
With demand brisk and supply of experts limited, some individuals report being charged as much as $4,000 a year to do relatively straightforward U.S. taxes – filings that would typically cost less than $1,000 in the United States. An individual who hasn’t filed for years can easily face tens of thousands of dollars in accounting fees to "come clean" (whatever that is supposed to mean), even if they owe no U.S. taxes.
Given that roughly 7 million Americans live outside the United States, FATCA is an accountant’s wet dream.

What individuals are U.S. taxpayers? Who is a U.S. citizen?
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.


What “Information Returns” are required to be reported to the IRS?

• FBAR (Now called FinCen 114)
• FATCA 8938 – Report of Specified Foreign Assets
• 5471 – Information return for Foreign Corporation
• 3520 – Information return for a “Foreign Trust”
• 3520A – related to the 3520

I am only a snowbird! Why does this affect me?

• Substantial Presence Test
• Form 8840 Closer Connection Exception Statement for Aliens
• Caution: Streamlined Programs & 35 day rule - Catch 22

What are the ways I can become compliant?

• Offshore Voluntary Disclosure Program – AKA “OVDP – Not appropriate for the vast majority of people
• Streamlined Compliance – A pre-packaged way to “clean up” past compliance problems
• Obeying the law – filing amended tax returns outside the “IRS Created” programs
• Delinquent FBAR Submission Procedures

What costs are involved in renouncing U.S. citizenship?

• 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
• The cost of any back taxes and penalties
• A $2350 administrative fee
• possibility of having to pay an “Exit Tax” (which can be the biggest problem)