# American Expat Relief Coming September 1st



## expatdiane

Some tax filing relief for expats starting September 1st.

The kinder, friendlier IRS just announced a special program to reduce the filing requirement stress of expats who didn't know that they had to file. Starting September 1st, they are launching a special program for "low compliance risk" taxpayers that will allow you to file the last 3 years of tax returns and the last 6 years of FBARS, if required, penalty free! 

So the 6 year filing statute is in essence being put on hold...so filing the last years and paying a minimal tax due with interest takes you "off the hook" for all prior years. All you have to do is provide a reasonable explanation, pass the review process, and "poof" the IRS is off your back. 

Keep in mind that this new procedure only applies to "low compliance risk" tax payers...those who owe little or no tax.


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## swisspinoy

expatdiane said:


> Some tax filing relief for expats starting September 1st.
> 
> The kinder, friendlier IRS just announced a special program to reduce the filing requirement stress of expats who didn't know that they had to file. Starting September 1st, they are launching a special program for "low compliance risk" taxpayers that will allow you to file the last 3 years of tax returns and the last 6 years of FBARS, if required, penalty free!
> 
> So the 6 year filing statute is in essence being put on hold...so filing the last years and paying a minimal tax due with interest takes you "off the hook" for all prior years. All you have to do is provide a reasonable explanation, pass the review process, and "poof" the IRS is off your back.
> 
> Keep in mind that this new procedure only applies to "low compliance risk" tax payers...those who owe little or no tax.


What about the concept of being innocent until proven guilty? When is one required to file the last 3 years of tax returns and the last 6 years of FBARs? If the IRS is not known to be on the back, will it be off the back if one does something not knowing if it is needed?


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## Bevdeforges

This is the IRS release about this "new" procedure: New Filing Compliance Procedures for Non-Resident U.S. Taxpayers

It's basically a return to the old "current year plus 3 years in arrears" - other than the FBAR filing requirement (which is now 6 years). Basically, the IRS doesn't have the resources to audit everyone who is in technical breach of the law, so they have to concentrate their efforts on those who might actually be evading some significant taxes due.
Cheers,
Bev


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## swisspinoy

Well, I didn't file 2009, so I logged into FreeFillableForms and was told that I couldn't use it. That kills that idea, even without mentioning the fact that the $20 billion information system won't process my address using FreeFillableForms.

It never ceases to amaze me how the IRS can waste $20 billion while neglecting the most basic and important element of an information system - the address.


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## Bevdeforges

swisspinoy said:


> Well, I didn't file 2009, so I logged into FreeFillableForms and was told that I couldn't use it. That kills that idea, even without mentioning the fact that the $20 billion information system won't process my address using FreeFillableForms.
> 
> It never ceases to amaze me how the IRS can waste $20 billion while neglecting the most basic and important element of an information system - the address.


I figure it's also a useful indication of just how interested they are in filings from abroad (unless, of course, you're evading zillions in taxes).
Cheers,
Bev


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## swisspinoy

Bevdeforges said:


> I figure it's also a useful indication of just how interested they are in filings from abroad (unless, of course, you're evading zillions in taxes).
> Cheers,
> Bev


The latest US political campaign seems to want one to believe that anyone who is not banking in America is automatically evading zillions in taxes. 

_...offshore assets that the Republican challenger's campaign condemned as an “unseemly and disgusting” character assault..._
IOL Mobile :: News :: Romney?s team slams ?disgusting? attack


I seriously hope that the following doesn't apply to US persons living in Switzerland:

_Swiss Raiffeisen to drop US clients amid tax row_
Swiss Raiffeisen to drop US clients amid tax row | AlterNet


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## maz57

The tax relief I want to see is an end to citizenship-based taxation. Plus eliminating FBAR's for non-residents. 

This endless revision of IRS regulations only adds to the confusion. No one really knows what they mean by "low compliance risk". And who the heck knows (or cares) what the maximum balance of their checking account was 6 years ago? 

I live in another country, bank in another country, pay tax in another country, and spend my money in another country. What business is it of the US government or the IRS? Their only interest in me is potential revenue. 

Please, just go away.


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## Bevdeforges

What's almost funny is that Romney is exactly the profile of taxpayer the whole FATCA thing is supposed to be seeking out: US resident, offshore accounts, vast wealth, financially savvy enough to make use of every available loophole, complex financial affairs, etc. 

Almost leads one to hope that should the schmuck get elected, he'd "fix" the tax code - but what do you want to bet it would only get "fixed" for wealthy US residents and nothing for those of us resident outside the US with dead normal local bank and savings accounts?

OTOH, the US isn't the only country that asks for disclosure of overseas accounts. My French tax declaration asks every year for a list of my bank and "life insurance" accounts outside of France. (Admittedly they don't ask for any balance information, just the account identification information.) That, I can live with and, in fact, I tend to "over report" just to be on the safe side.
Cheers,
Bev


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## maz57

Right you are, Bev. Canada also wants similar information on assets and income from abroad. But the difference is that France and Canada are our respective tax homes. And if the income is significant we will probably pay some tax to our respective governments. Fair enough, there are many advantages to living in Canada--I'm sure France is the same.

The US is home to neither of us; not in a tax sense and not in a residential sense. In my case not for 40 years. Yet the US still requires all of this useless invasive reporting, threatening ruinous financial penalties or even prison for the slightest infraction. I know that they can't really touch me but I would like the freedom to travel to the US occasionally to visit relatives. I would never move back to the US. I have had (and continue to have) a very good life here in Canada.

The result is that I have begun to resent and even hate the government of my country of birth. As I have stated before on this forum, I do not intend to live the rest of my life with this hanging over my head. So they either come up with some real relief or I'm going to fix the problem myself, once and for all.


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## swisspinoy

maz57 said:


> Right you are, Bev. Canada also wants similar information on assets and income from abroad. But the difference is that France and Canada are our respective tax homes. And if the income is significant we will probably pay some tax to our respective governments. Fair enough, there are many advantages to living in Canada--I'm sure France is the same.
> 
> The US is home to neither of us; not in a tax sense and not in a residential sense. In my case not for 40 years. Yet the US still requires all of this useless invasive reporting, threatening ruinous financial penalties or even prison for the slightest infraction. I know that they can't really touch me but I would like the freedom to travel to the US occasionally to visit relatives. I would never move back to the US. I have had (and continue to have) a very good life here in Canada.
> 
> The result is that I have begun to resent and even hate the government of my country of birth. As I have stated before on this forum, I do not intend to live the rest of my life with this hanging over my head. So they either come up with some real relief or I'm going to fix the problem myself, once and for all.


The US government is welcome to threaten me, and the minute it does so, I'll renounce. I love America and the American people, my ancestry helped to build America, but I left the United States to find a job instead of collecting unemployment checks and thus I have absolutely no interest in being threatened by that country. I'll do what I can to comply with its demands, but it if won't work with me, then I'll stop working with it.


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## Bevdeforges

maz57 said:


> Right you are, Bev. Canada also wants similar information on assets and income from abroad. But the difference is that France and Canada are our respective tax homes. And if the income is significant we will probably pay some tax to our respective governments. Fair enough, there are many advantages to living in Canada--I'm sure France is the same.
> 
> The US is home to neither of us; not in a tax sense and not in a residential sense. In my case not for 40 years. Yet the US still requires all of this useless invasive reporting, threatening ruinous financial penalties or even prison for the slightest infraction. I know that they can't really touch me but I would like the freedom to travel to the US occasionally to visit relatives. I would never move back to the US. I have had (and continue to have) a very good life here in Canada.
> 
> The result is that I have begun to resent and even hate the government of my country of birth. As I have stated before on this forum, I do not intend to live the rest of my life with this hanging over my head. So they either come up with some real relief or I'm going to fix the problem myself, once and for all.


This is all perfectly valid - and the price we pay for having been born US citizens. The US tax system is particularly complex, thanks to the "do-it-yourself" nature of the tax reporting system and those of us who live overseas have to learn how to play the system. (No different, I figure, than what Mr. Romney does with all his vast zillions.)

There are things I will not report to the IRS - but, being an accountant by trade, I generally have a justification up my sleeve should the matters ever come up for question. (I also take into consideration how likely it is that the IRS would have any reason to know or find out about such items - but not having enough income or assets to be too obvious on their radar certain helps.) 

I do have an IRA back in the US and I feel that I am ethically obligated to pay my taxes on that when I start to withdraw funds. That was the deal when I established the fund, and that's what I agreed to. I'm less thrilled with the taxation on Social Security for those of us married to NRAs - but I have a few years to go yet before that becomes an issue.

Renunciation is always an option. But it's an option that carries certain consequences - and those consequences have changed over time. It's not a move to consider lightly, nor something anyone should be pushing "everyone" to do. There are lots of other ways to address the issue.
Cheers,
Bev


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## swisspinoy

I just got a snail mail letter from the IRS. It says that they were unable to process a request for Transcript of Tax Return because of an incomplete or missing address. The address is obviously good because I got the letter, and it's the same address that I used for filing, but they may have another address on file since I've used different US addresses whenever the system prevented me from entering my local address.


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## byline

Bevdeforges said:


> This is all perfectly valid - and the price we pay for having been born US citizens. The US tax system is particularly complex, thanks to the "do-it-yourself" nature of the tax reporting system and those of us who live overseas have to learn how to play the system. (No different, I figure, than what Mr. Romney does with all his vast zillions.)


My question is, why do we have to pay a price simply because we live outside the United States? I married a Canadian. If he were to gain permanent residence in the United States, the "price" he would have to pay from the Canadian side would be nowhere near mine.

I'm still angry about being treated like a second-class citizen simply because I live outside the U.S., and I'm still angry about what other people have had to go through because the IRS didn't get its act together _first_, in terms of separating those of us who simply didn't know from those who were deliberately hiding money away. It's the fact that everyone was lumped into the same group that has caused so much anxiety, uncertainty and financial upheaval. In this case, better late than never doesn't quite cut it. Not when it's been the cause of so much pain.


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## Bevdeforges

byline said:


> My question is, why do we have to pay a price simply because we live outside the United States? I married a Canadian. If he were to gain permanent residence in the United States, the "price" he would have to pay from the Canadian side would be nowhere near mine.
> 
> I'm still angry about being treated like a second-class citizen simply because I live outside the U.S., and I'm still angry about what other people have had to go through because the IRS didn't get its act together _first_, in terms of separating those of us who simply didn't know from those who were deliberately hiding money away. It's the fact that everyone was lumped into the same group that has caused so much anxiety, uncertainty and financial upheaval. In this case, better late than never doesn't quite cut it. Not when it's been the cause of so much pain.


You can be angry about it if you want. But it won't do much good.

The IRS only writes regulations for legislation passed by Congress. Much of the idiocy of the Tax Code comes from the legislation. As a tax consultant friend of mine likes to say, "write your Congresscritter" - although I find that most members of Congress don't realize that they actually do have constituents who reside outside the US. Many won't even open mail to their offices with a postmark from outside their district, and to contact them via their websites, you have to give a street address that falls within their district - or a zip code. 

If the folks back in the US would elect more intelligent life forms to represent them, there might be something more we could do to get some changes made. But if you've been reading the news from back there lately, that's not likely to happen anytime soon.
Cheers,
Bev


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## maz57

Bevdeforges said:


> You can be angry about it if you want. But it won't do much good.
> 
> The IRS only writes regulations for legislation passed by Congress. Much of the idiocy of the Tax Code comes from the legislation. As a tax consultant friend of mine likes to say, "write your Congresscritter" - although I find that most members of Congress don't realize that they actually do have constituents who reside outside the US. Many won't even open mail to their offices with a postmark from outside their district, and to contact them via their websites, you have to give a street address that falls within their district - or a zip code.
> 
> If the folks back in the US would elect more intelligent life forms to represent them, there might be something more we could do to get some changes made. But if you've been reading the news from back there lately, that's not likely to happen anytime soon.
> Cheers,
> Bev


Here's my take on how it all works. No one gets elected to Congress without fairly deep pockets to start with. Then you have to have connections with vested interests who have even deeper pockets. They make the contributions necessary to run a successful campaign and in return expect valuable consideration post election. Actual paper bags filled with cash are illegal and unseemly so instead the payback comes in the form of tax breaks for the special interest groups. 

The result over time is the world's most complex tax code that even the experts have trouble understanding. I don't think anyone in Congress purposefully set out to screw the expat community. However, the mere fact of living abroad is seen as a highly suspicious activity and having a "foreign" bank account, well that's practically proof of tax evasion. 

I've heard it said "there is no need to attribute to malice that which can adequately explained by simple incompetence and stupidity". So us expats are merely collateral damage in an effort to be seen to be doing something about the resident tax cheats with offshore accounts. The poor IRS (did I say that?) is charged with implementing every whim of Congress. The IRS is a huge bureaucracy and no one person has any control over the overall function of the organisation. 

Think of it as a mouse sleeping with an elephant. The elephant isn't even aware of the mouse but sure as heck could accidentally crush it without knowing. So I hope for some expat tax relief but realistically, expect nothing. As far as the anger is concerned, it can be put to good use to plan a strategy for self preservation; no one in Congress or the IRS gives a damn. Us expats have to look out for ourselves. 

As far as renunciation goes, that might work for some, myself included. The truth of the matter is most of the people in the world do not have US citizenship. Most manage to live perfectly happy, productive, and normal lives. I think we happen to be alive in a time in which we will witness the decline of a once great human experiment. Very sad, but nothing lasts forever.


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## albator73

expatdiane said:


> Some tax filing relief for expats starting September 1st.
> 
> The kinder, friendlier IRS just announced a special program to reduce the filing requirement stress of expats who didn't know that they had to file. Starting September 1st, they are launching a special program for "low compliance risk" taxpayers that will allow you to file the last 3 years of tax returns and the last 6 years of FBARS, if required, penalty free!
> 
> So the 6 year filing statute is in essence being put on hold...so filing the last years and paying a minimal tax due with interest takes you "off the hook" for all prior years. All you have to do is provide a reasonable explanation, pass the review process, and "poof" the IRS is off your back.
> 
> Keep in mind that this new procedure only applies to "low compliance risk" tax payers...those who owe little or no tax.




Hi,

I was in middle of doing my Tax for last 6 year. But this announce in June just confused me more, should we wait for the program in Sept before submit it? 

If I submit it now, can I only send the last 3 years and should I benefit also from "low compliance risk"?

Thanks


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## swisspinoy

albator73 said:


> Hi,
> 
> I was in middle of doing my Tax for last 6 year. But this announce in June just confused me more, should we wait for the program in Sept before submit it?
> 
> If I submit it now, can I only send the last 3 years and should I benefit also from "low compliance risk"?
> 
> Thanks


I spoke with the IRS yesterday and asked them if they wanted me to file 2009 since I hadn't filed it. They said that they would like for me to do so, so I'll go ahead and snail mail it to them. I'll send any documentation that they want to have. I hate using snail mail, though, because it costs the US taxpayer and myself more money and it makes sensitive data about Americans easily accessible to terrorists who could intercept the snail mail. Just this week, the US government warned that Americans abroad need to act with caution since they are targets of terrorism.


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## Ranch

swisspinoy said:


> The US government is welcome to threaten me, and the minute it does so, I'll renounce. I love America and the American people, my ancestry helped to build America, but I left the United States to find a job instead of collecting unemployment checks and thus I have absolutely no interest in being threatened by that country. I'll do what I can to comply with its demands, but it if won't work with me, then I'll stop working with it.


Bravo. By the way how long can you live outside of USA before you can renounce? I believe you need to have a solid backup plan such as another passport first?

Based on my research the US govt has made it nearly impossible for Americans to function overseas in a business capacity because local banks refuse to setup even the most basic checking account for US citizens. I visited several branches of European banks recently, not even knowing anything about FATCA, and I was turned down by all of them as if I were a rotten virus. FATCA FATCA FATCA every other word they said as they rushed me out the door. Had I been a Cambodian, Japanese, Brazilian, etc, I would be welcome to open a bank account and do business! A simple bank account is one of the first steps in creating a legitimate business in a foreign country. FATCA is a severe impediment to all American entrepreneurs. The longterm negative impact is immeasurable.


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## Bevdeforges

maz57, I think you've summed it up rather nicely.

"Americans living overseas" summons up an image in the US of caviar swilling fatcats on expense accounts - and that's what drives the Congresscritters as they try to appease their constituents. There is some lobbying done on behalf of overseas residents, but the way we're split up in terms of voting district means that we aren't seen to have any real weight. (Actually, no one knows how many of us there are.)

The one option we do have (short of renunciation, that is) is "selective reporting." Some elements of our "worldwide income" the IRS has the ways and means to find out about (should they care to) and other elements, not so much so, if at all. 
Cheers,
Bev


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## Bevdeforges

Ranch said:


> Bravo. By the way how long can you live outside of USA before you can renounce? I believe you need to have a solid backup plan such as another passport first?
> 
> Based on my research the US govt has made it nearly impossible for Americans to function overseas in a business capacity because local banks refuse to setup even the most basic checking account for US citizens. I visited several branches of European banks recently, not even knowing anything about FATCA, and I was turned down by all of them as if I were a rotten virus. FATCA FATCA FATCA every other word they said as they rushed me out the door. Had I been a Cambodian, Japanese, Brazilian, etc, I would be welcome to open a bank account and do business! A simple bank account is one of the first steps in creating a legitimate business in a foreign country. FATCA is a severe impediment to all American entrepreneurs. The longterm negative impact is immeasurable.


It's not a matter of how long you live outside the US, but rather having a second nationality to fall back on. You have to renounce from outside the US, but without a nationality, your ability to remain in the country you're in could be called into question.

I've been hearing about banks (mostly in northern Europe) refusing to open new accounts for Americans, or even closing out Americans' accounts. You might be interested in a book called "The Unknown Ambassadors" by Phyllis Michaux. The issues have changed, but Phyllis has been fighting this sort of thing since the 1950's. 

I disagree a bit with the direction she has taken on the issue (mainly pushing for voting and citizenship rights for overseas Americans) but I know Phyllis personally and I admire her dedication to the cause, and her argument that many of these policies are detrimental to the home country.
Cheers,
Bev


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## RødGrød

Ranch said:


> Bravo. By the way how long can you live outside of USA before you can renounce? I believe you need to have a solid backup plan such as another passport first?
> 
> Based on my research the US govt has made it nearly impossible for Americans to function overseas in a business capacity because local banks refuse to setup even the most basic checking account for US citizens. I visited several branches of European banks recently, not even knowing anything about FATCA, and I was turned down by all of them as if I were a rotten virus. FATCA FATCA FATCA every other word they said as they rushed me out the door. Had I been a Cambodian, Japanese, Brazilian, etc, I would be welcome to open a bank account and do business! A simple bank account is one of the first steps in creating a legitimate business in a foreign country. FATCA is a severe impediment to all American entrepreneurs. The longterm negative impact is immeasurable.


Ranch, it looks like you are in Denmark. It is very easy to renounce US citizenship once you are granted provisional Danish citizenship (Denmark requires you to renounce other citizenships before they'll give you a passport). I did it, and you are welcome to contact me if you have any questions.


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## byline

Bevdeforges said:


> You can be angry about it if you want. But it won't do much good.


Actually, it will. It will help to direct my future course of action and how far I decide to pursue it. I understand your point. But I also don't intend to be treated like easy fodder for the intimidation machine for the rest of my life, either.


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## Mona Lisa76

humanaso said:


> Who here can tell us what "low compliance risk" tax payers are? without that answer the program is meaningless.


 I would guess that officially it's only a very small percentage. Many Americans living abroad could easily wind up owing over $1500 in US taxes if they, for instance, had to pay capital gains taxes on the sale of their primary residence or if they held 'foreign' mutual funds (PFIC taxation). 



On the other hand, I would like to think that in reality the IRS will also include a large grey area of expat minnows within it's 'low-compliance risk' category for expat filing even though the official definition is quite narrow.


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## Bevdeforges

Mona Lisa76 said:


> I would guess that officially it's only a very small percentage. Many Americans living abroad could easily wind up owing over $1500 in US taxes if they, for instance, had to pay capital gains taxes on the sale of their primary residence or if they held 'foreign' mutual funds (PFIC taxation).
> 
> 
> 
> On the other hand, I would like to think that in reality the IRS will also include a large grey area of expat minnows within it's 'low-compliance risk' category for expat filing even though the official definition is quite narrow.


I think you're being a bit pessimistic here. "Low compliance-risk" probably covers the bulk of American expats - those whose main source of income is salary income (subject to the FEIE) plus a nominal amount of bank interest or investment income easily offset by taxes paid to their "host country" system.
Cheers,
Bev


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## Mona Lisa76

Bevdeforges said:


> I think you're being a bit pessimistic here. "Low compliance-risk" probably covers the bulk of American expats - those whose main source of income is salary income (subject to the FEIE) plus a nominal amount of bank interest or investment income easily offset by taxes paid to their "host country" system.
> Cheers,
> Bev


I'm sure you're correct here...it's just that I was an anomaly because I had invested in UK mutual funds (held over many years) and so wound up having to pay a large amount of taxes on phantom capital gains due to 'PFIC' income (passive foreign investment company). I also had to pay the accountant a five figure sum.

Looking back, I realize now that I should have gotten professional advice from the start instead of being a DIY investor and filer.


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## Bevdeforges

The killer in these situations are the various "tax free" funds (and other arrangements, such as "tax advantaged" retirement arrangements) that are available in so many countries. If you have no foreign taxes with which to offset the demands of the US, then you lose the advantages of such funds altogether.

The system is definitely unfair - but in the current financial and political climate it seems a lost cause to try to oppose it.
Cheers,
Bev


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## swisspinoy

Bevdeforges said:


> The killer in these situations are the various "tax free" funds (and other arrangements, such as "tax advantaged" retirement arrangements) that are available in so many countries. If you have no foreign taxes with which to offset the demands of the US, then you lose the advantages of such funds altogether.
> 
> The system is definitely unfair - but in the current financial and political climate it seems a lost cause to try to oppose it.
> Cheers,
> Bev


Most banks in Switzerland are now refusing to provide services to "US Persons". In the US, it is a federal crime to deny a mortgage to one due to their national origin and yet US policy is forcing banks to practice US federal crimes against American citizens. What will it take to finally get the global community to acknowledge that citizenship-based taxation is a crime against humanity?


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## Mona Lisa76

swisspinoy said:


> Most banks in Switzerland are now refusing to provide services to "US Persons". In the US, it is a federal crime to deny a mortgage to one due to their national origin and yet US policy is forcing banks to practice US federal crimes against American citizens. What will it take to finally get the global community to acknowledge that citizenship-based taxation is a crime against humanity?


Lls
Yes, theUS wants to have it both ways. I would consider moving my investments back to a US bank. but they won't let me with my UK address. So I'm forced to use a locally US-compliant investment with high charges. Seems like blatent discrimination!


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## compostelle

I am hoping that the guidlines will help me to clear up some NEW TO ME outstanding questions that I have. I did file ON time , 6 years of FBARS, after many, many hours of work and searching for papers, but have recently come across a post on another website telling me that I must report my TFSA (tax free saving account) to the IRS on the form 3520. I have closed the TFSA anyway, held a GIC for just 3 years. I am trying to figure the form out,and have asked my bank for addition help.
They have told me that my GIC held withing the TFSA are not considered a foreign 
trust. But it would be to my advantage to have a document from my bank that would put in writing that my GIC is not a foreign trust, but my bank is not willing to do that. Any advice on this? Should I just let sleeping dogs lie, I did report the TFSA as a bank account on my FBAR's, and I really don't want to have to pay a lot of money to get help filing out the 3520 if my bank tells me it isn't a foreign trust. 
Is their verbal assurance that it is not a foreign trust enough for the IRS, if they would even come back and ask me? Thanks!


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## Bevdeforges

This isn't an official response by any means, but given that you've closed the account, I'd just let it lie. You disclosed the account on your back filings. Unless there is something "suspicious" about it, chances are the IRS will simply mark you down as "having filed" and probably not look much farther into it.
Cheers,
Bev


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## luvcanada

*Plan to renounce citizenship*

I am a US citizen but left the US almost 35 years ago and just filed my back taxes and FBARs for the last six years. I don't have any emotional attachment to the US although I lived there until my early 30s. I live in Canada, love it and am a Canadian citizen. I plan to renounce my US citizenship because I see no benefit in filing these reports every year and no desire to tell the IRS about my meagre finances or those of my wife, a non-US citizen who has never lived in the US. 

What are the negative implications if I renounce my US citizenship and where can I get information on how to renounce.


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## Bevdeforges

luvcanada said:


> I am a US citizen but left the US almost 35 years ago and just filed my back taxes and FBARs for the last six years. I don't have any emotional attachment to the US although I lived there until my early 30s. I live in Canada, love it and am a Canadian citizen. I plan to renounce my US citizenship because I see no benefit in filing these reports every year and no desire to tell the IRS about my meagre finances or those of my wife, a non-US citizen who has never lived in the US.
> 
> What are the negative implications if I renounce my US citizenship and where can I get information on how to renounce.


We've been around on this topic any number of times. 

Contact your nearest US Consulate for the low down on how to renounce, and they will most likely give you the "standard pitch" on the negative implications. http://www.state.gov/documents/organization/115645.pdf is the section from the US Consular Affairs Manual if you want a preview.

Practically speaking, the major negative at the moment is possible confusion on entry to the US if an immigration officer notices that your place of birth is in the US but you are entering on a non-US passport. (Solution: carry your renunciation certificate with you any time you go to the US).

If you fall into a certain income and/or wealth bracket, renunciation can carry various tax penalties: i.e. the "expatriation tax" obligation - either a one-time settle up based on all your assets, or a 10-year obligation to file US tax returns after renunciation (or, potentially, both of the above). Oh, and the act of renunciation itself costs you - something like $450 to process the paperwork.

Other than that, good luck with your decision.
Cheers,
Bev


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## Zirondelle

RødGrød said:


> Ranch, it looks like you are in Denmark. It is very easy to renounce US citizenship once you are granted provisional Danish citizenship (Denmark requires you to renounce other citizenships before they'll give you a passport). I did it, and you are welcome to contact me if you have any questions.


Interesting...how easy is it to "become" Danish? Maybe I need to check another sub-forum. In fact, I have Danish ancestry but fairly remote.

Thanks for the vector.

-Z


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## Zirondelle

I was a US diplomat working for NATO for 8 years during the 90s. During that time I fell under 3 differing NATO treaties concerning taxes.

*THE IRS UNDERSTOOD NONE OF THEM* and routinely gave us bad information. It was so bad that I, and several others, took it up with the Charge d'affaires. We got into several tax fights, and basically won every case, and never even got into tax court although we came close at least once.

Point is, the Keystone Kops of the IRS usually have feet of clay if you know your ground in regards to taxes on Expats. And if it is a grey area, color it your way; and if they don't "rule" your way, threaten them with tax court. BTW, they lose much more than they win in court, and they (the IRS) know it.


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## swisspinoy

Zirondelle said:


> I was a US diplomat working for NATO for 8 years during the 90s. During that time I fell under 3 differing NATO treaties concerning taxes.
> 
> *THE IRS UNDERSTOOD NONE OF THEM* and routinely gave us bad information. It was so bad that I, and several others, took it up with the Charge d'affaires. We got into several tax fights, and basically won every case, and never even got into tax court although we came close at least once.
> 
> Point is, the Keystone Kops of the IRS usually have feet of clay if you know your ground in regards to taxes on Expats. And if it is a grey area, color it your way; and if they don't "rule" your way, threaten them with tax court. BTW, they lose much more than they win in court, and they (the IRS) know it.


The last thing that an expat wants to do, is to waste their valuable time fighting against the IRS in a court. We simply want to live a normal life like the people around us. US problems are an American thing for stateside folks that expats shouldn't be bothered with.


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## Zirondelle

swisspinoy said:


> The last thing that an expat wants to do, is to waste their valuable time fighting against the IRS in a court. We simply want to live a normal life like the people around us. US problems are an American thing for stateside folks that expats shouldn't be bothered with.


I agree. Unfortunately the Apparatchiks at the IRS do not see things that way. If you don't fight, then you must pay. BTW, the US has an extradition treaty with the Swiss last time I looked. With the current "All Expats are tax avoiding swine" attitude that is in ascendance within the IRS these days (courtesy of the Obama administration), you have an interesting choice to make.


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## luvcanada

*Thanks for info.*



Bevdeforges said:


> We've been around on this topic any number of times.
> 
> Contact your nearest US Consulate for the low down on how to renounce, and they will most likely give you the "standard pitch" on the negative implications. http://www.state.gov/documents/organization/115645.pdf is the section from the US Consular Affairs Manual if you want a preview.
> 
> Practically speaking, the major negative at the moment is possible confusion on entry to the US if an immigration officer notices that your place of birth is in the US but you are entering on a non-US passport. (Solution: carry your renunciation certificate with you any time you go to the US).
> 
> If you fall into a certain income and/or wealth bracket, renunciation can carry various tax penalties: i.e. the "expatriation tax" obligation - either a one-time settle up based on all your assets, or a 10-year obligation to file US tax returns after renunciation (or, potentially, both of the above). Oh, and the act of renunciation itself costs you - something like $450 to process the paperwork.
> 
> Other than that, good luck with your decision.
> Cheers,
> Bev


Thanks, Bev. I will review the link. Fortunately (or unfortunately, depending on your point of view) I don't think I will fall into the wealth bracket that they will be concerned about. Regarding the passport issue, I always use my Canadian passport when traveling to the US - I feel more Canadian than American - and have never had any issues but will heed your suggestions.


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## Transplant_DK

I'm in the middle of trying to complete tax forms from many years back and just read about this low compliance angle. Now I'm wondering if I should forget about the older ones and only concentrate on the last 3 years, or if I'm understanding the posts here correctly that I would have had to file 2009 through ordinary channels? 

Also, regarding the definition of low compliance--I have bank accounts in my foreign tax home and they do occasionally go over the $10,000 limit since I'm paid sporadically, so I understand I need to complete the FBARS. I also have a bank account in the US that I use only for the purpose of paying a student loan (I transfer money from my foreign account to cover an automatic payment). Would that disqualify me even though I do not owe taxes (due to the foreign income exclusion and/or foreign tax credit)? Would payment (through my work) to a retirement fund disqualify me? The retirement fund is one set up by my work and so it's not an account per se: does this need to be reported? 

I guess my question is: when I'm so far behind in filing, what's my best option? Filing isn't a simple process, I have a small amount of interest income (from the US only) and I have sold some stocks in the past that will appear as capital gains (although I still don't think I owe taxes due to the exclusions and taxes paid in the foreign countries).


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## swisspinoy

Transplant_DK said:


> I'm in the middle of trying to complete tax forms from many years back and just read about this low compliance angle. Now I'm wondering if I should forget about the older ones and only concentrate on the last 3 years, or if I'm understanding the posts here correctly that I would have had to file 2009 through ordinary channels?
> 
> Also, regarding the definition of low compliance--I have bank accounts in my foreign tax home and they do occasionally go over the $10,000 limit since I'm paid sporadically, so I understand I need to complete the FBARS. I also have a bank account in the US that I use only for the purpose of paying a student loan (I transfer money from my foreign account to cover an automatic payment). Would that disqualify me even though I do not owe taxes (due to the foreign income exclusion and/or foreign tax credit)? Would payment (through my work) to a retirement fund disqualify me? The retirement fund is one set up by my work and so it's not an account per se: does this need to be reported?
> 
> I guess my question is: when I'm so far behind in filing, what's my best option? Filing isn't a simple process, I have a small amount of interest income (from the US only) and I have sold some stocks in the past that will appear as capital gains (although I still don't think I owe taxes due to the exclusions and taxes paid in the foreign countries).


I think that this is your best option, but I'm not a tax preparer or CPA and thus I won't threaten or scare you into paying huge fees. I'd recommend that you call the IRS directly and discuss all of the issues directly with them. If you are nice to them, then they will be nice to you, even if they appear grumpy at first. Just be friendly and patient.

I'd say, just do the last 3 years and last 6 years of FBARs. The US bank account shouldn't cause any problems, as mentioned in the comments here: 

Newest Offshore IRS Amnesty Not For Everyone - Forbes​Even though it is "foreign" for you, it is not "foreign" for the IRS, I guess. For the US, "foreign" is anything that is outside of US borders, including US citizens who work abroad.

Your retirement fund probably does not have to be reported, depending upon the double-tax treaty with your government. On this, the IRS wrote to me:

When reporting worldwide income, you must include any income that is received. Since the income is deferred from your pay until a future date, you would not include that amount in your gross income for the year.
US Expatriate Foreign Pension Plans Continued? | American Working Middle Class Abroad​
I don't know about capital gains. I've stayed away from those since the US makes it complicated and audit-needy.

For filing, it would probably be best to use a free filer. Here is a little review:

Myth: EVERYONE is Eligible to Free File! | American Working Middle Class Abroad​
You can use it to design the basic stuff while inquiring with the IRS on the more complex issues, and then manually entering in the dated into printed tax documents, since US tax preparers are utterly horrified with the thought of expats free-filing current or previous year returns. I wrote an article on doing past-year tax returns with money-hungry tax preparers:

_Day One: Filing Previous Year Tax Returns_
http://goo.gl/DuVgp​
The second part, Day Two, is pending and I'll finish it when I get around to it.

When you are done, post your experience with how it relates to your country, such as here where it is described in relation to Hong Kong:

IRS “Streamlined Filing Compliance Procedures” and Hong Kong: Shatin Families Calumniated & Plundered
http://goo.gl/xq1gq​


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## Bevdeforges

Transplant_DK said:


> Also, regarding the definition of low compliance--I have bank accounts in my foreign tax home and they do occasionally go over the $10,000 limit since I'm paid sporadically, so I understand I need to complete the FBARS. I also have a bank account in the US that I use only for the purpose of paying a student loan (I transfer money from my foreign account to cover an automatic payment). Would that disqualify me even though I do not owe taxes (due to the foreign income exclusion and/or foreign tax credit)? Would payment (through my work) to a retirement fund disqualify me? The retirement fund is one set up by my work and so it's not an account per se: does this need to be reported?


Not sure what you mean by "Would that disqualify me" - from what? 



> I guess my question is: when I'm so far behind in filing, what's my best option? Filing isn't a simple process, I have a small amount of interest income (from the US only) and I have sold some stocks in the past that will appear as capital gains (although I still don't think I owe taxes due to the exclusions and taxes paid in the foreign countries).


As Swisspinoy has suggested, do the last 3 years of tax returns. If those really do show that you owe no taxes, then be done with it. File the last 6 years of FBARS (but don't include any US accounts in those - either on the forms or when figuring the $10,000 threshold).

If the retirement account is an overseas account (i.e. non-US) and you get a statement telling you how much is in the account on some sort of regular basis, then just report it. Should they have problems with it, they'll get back to you. If it's a regular retirement fund - that you have no way of accessing until you reach retirement age - then don't bother. 
Cheers,
Bev


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## Transplant_DK

Bevdeforges said:


> Not sure what you mean by "Would that disqualify me" - from what?


I meant, would that put me out of the low compliance category. 



Bevdeforges said:


> As Swisspinoy has suggested, do the last 3 years of tax returns. If those really do show that you owe no taxes, then be done with it. File the last 6 years of FBARS (but don't include any US accounts in those - either on the forms or when figuring the $10,000 threshold).
> 
> If the retirement account is an overseas account (i.e. non-US) and you get a statement telling you how much is in the account on some sort of regular basis, then just report it. Should they have problems with it, they'll get back to you. If it's a regular retirement fund - that you have no way of accessing until you reach retirement age - then don't bother.
> Cheers,
> Bev


So would there be any disadvantage to filing all of the missing years now? I have been working on them for weeks/months now, and I'm beginning to see the light and really only have 4 back years left (i.e. the 3 years I'd have to file now and 1 more). Part of me wants to go ahead and send them all (I owe no taxes if I've figured correctly), but not if it's going to put me in a worse situation than if I were to file under the low compliance rules (from what I understand, those are submitted to another address and are handled differently than if I submit them via regular channels). 

I'm using the fill-in forms and printing them out, if that makes a difference.


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## RødGrød

Transplant: I would just file the three years required by the amnesty program. If the IRS wants to see more years then they'll let you know. Since you've already done the work, you can save them just in case they ask for them, but, in my opinion, there's no reason to draw attention to yourself by sending in more than they require.

How do you deal with your retirement account on your actual tax forms? Since the US-Danish tax treaty makes no allowance for our "foreign" retirement accounts, I'm always curious as to how my fellow Americans in DK report them.


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## Transplant_DK

Hi Rødgrød: I have completely ignored the issue of the retirement accounts, since nothing has been paid out (therefore not income). I'm not sure how the US gov't will feel about that, but I can't see where they are to be mentioned. Since I don't have signing authority over them now, I'm assuming they don't need to be included in the FBARS either. 

What is your strategy?


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## Transplant_DK

Just for clarification there--when I report my Danish earned income, I'm reporting the total amount that includes what is paid towards my retirement, even though it is not taxed by the Danish gov't. I had asked about that in another thread some time ago and was told to use the total income amount.


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## RødGrød

Transplant_DK said:


> Just for clarification there--when I report my Danish earned income, I'm reporting the total amount that includes what is paid towards my retirement, even though it is not taxed by the Danish gov't. I had asked about that in another thread some time ago and was told to use the total income amount.


I do the same as you, and other people I've discussed this with also do the same. I called the IRS once and asked about it and they had no idea, so I do what seems to make the most sense.


Edit: I should have said "have done" since I renounced in February and only have to file one more time. :clap2:


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## Bevdeforges

As RodGrod says (sorry, I don't have the Danish character on my keyboard), just file what you need to file - 3 years back for tax returns and 6 years for FBAR. Don't get too concerned about this "low compliance" thing (I think it's actually "low compliance risk" - i.e. the risk of you owing anything significant is real low) - just send them in as back filings and forget about them.

The IRS will get back to you if there is anything seriously wrong with them - but unless they suspect they can collect some major back taxes and penalties from you I suspect they'll just marked you down as "filed" and be done with it all.
Cheers,
Bev


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## Transplant_DK

Thanks a bunch, I'll switch gears and get going on the last 3 years. At least the others are all done in case they come back for more later...


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## swisspinoy

Transplant_DK said:


> Hi Rødgrød: I have completely ignored the issue of the retirement accounts, since nothing has been paid out (therefore not income). I'm not sure how the US gov't will feel about that, but I can't see where they are to be mentioned. Since I don't have signing authority over them now, I'm assuming they don't need to be included in the FBARS either.
> 
> What is your strategy?


The IRS told me that to report employer pension funds in FBAR. I don't know if they were right, but that's what they said. Just call them, ask and let us know what they told you.


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## Transplant_DK

I was also told to report pension funds in FBAR "just in case". I'll do so, if I can figure out the account numbers.


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## Transplant_DK

Finally all done with the last 3 years plus the 6 years of account info, filled out the questionnaire and even the envelope........only to find out that I first have to file an application to have my social security card/account updated, since I never did that when I married. The IRS will accept a copy of the application, but I have to visit the embassy in Copenhagen to submit the application so they can see my passport and my marriage license. 

I'm going to be doing a major happy dance when I am finally able to submit!


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## JungleJim

*Help with 3520a*

I'm just about ready to do my "happy dance" too! 

Finally after all the fear, trepidation and angst over the process, and 200 hours of filling out forms condensed in 3 week period (night and day), I have finished my 6 years FBARS, two years 8938, and 4 years tax returns (yes, one more than required). 

I have a question for anyone on form 3520a... 
Form 3520a page 4, question 8:
“Attach an explanation of the facts and law (including the section of the Internal Revenue Code) that establishes that the foreign trust (or portion
of the foreign trust) is treated for U.S. tax principles as owned by another person.”

What are they asking for? Does anyone send an attachment with this? What Code are we supposed to cite? 

I have a family trust, used extensively in Australia for farmers, as legal protection and used like a company, without the company tax problems. I also have a couple Unit Trusts which treat different investors in the trusts as Unit holders (think Share Holders)... how would anyone know IRS codes to support our situation?

Separately, I say to anyone looking to file - just do it and 'get legal'. I have to file on Monday my past years 1040, three 5471's, three 3520a's and the 8938 for each year applicable, and it all seemed soooo insurmountable in the beginning. 
But, I got through it! :clap2:

Yes, I have complaints about the process, the unfairness of making us go through this, but someday, I might want to visit the U.S. again for extended period, and I can't afford to miss out. It's a great feeling to overcome this huge hurdle, and I will certainly be keeping up in the future. My ONE KUDO is to who ever brought about the "Streamlined" program, because without it, I don't know how I could have faced this... maybe I couldn't have


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## Bevdeforges

I honestly have no idea how they expect anyone to do that one, but I notice that the request for IRS Code and chapter number is actually question 7 and that question 8 says something about "if the trust has not appointed a US agent" to just list the documents of the trust that you are attaching.

If you have a copy of the trust documents, I would simply send them a copy (at least they're in English and you don't need to send a translation!) and list that for question 8. That way you've "fully disclosed" what you have, and if they have questions, they'll get back to you. 

When in doubt, go for full disclosure and let the IRS decide what else they want.
Cheers,
Bev


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## Transplant_DK

Anybody have an idea what kind of time frame to expect on responses from the IRS on these? I'm still holding my breathe over here....


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## JungleJim

Transplant_DK said:


> Anybody have an idea what kind of time frame to expect on responses from the IRS on these? I'm still holding my breathe over here....


I don't know what's normal... I sent mine in mid October and I haven't heard back on my 1040's. 

However, I received a couple IRS notices on my Foreign Trusts that were documented in my return, saying they wanted further back then 4 years (formed 5 years ago). I filed 3520a's being a trust formed under Australian law, but they are also claiming I have to file 1041's.... which I have disputed in writing a few days ago. They may be right though... if a US Person has control of a foreign trust, even though I live in Australia for 20 years, they might look at it as being a US trust because it is controlled by a US Person. I hope this doesn't open a can of worms I can't handle...

We owed no taxes to US and we pay our taxes in Australia, but jeesh the paperwork and research to comply is full on....


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## Transplant_DK

I sent mine end at the end of September--I don't owe anything either, and they were pretty straight forward (although I did have to deduct taxes paid in Denmark in addition to the foreign exemption, so there was a lot of foreign currency exchanges). They haven't asked for more info, and haven't contacted me at all. I'm really hoping no news is good news. Is there any way to follow up online? Like to check status?


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## Bevdeforges

As far as I know, it's a matter of "no news is good news." If everything is hunky dory, they won't contact you at all. If they want or need something more, or there is a question about your return, then you'll get an official looking letter in the mail.
Cheers,
Bev


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## maz57

Maybe I'm missing something, but this new (as of Sept. 1) streamlined filing procedure is no relief at all. By Jungle's own accounting, he's just spent 3 weeks of his precious time on planet earth filling out useless forms proving he owes no money to the US government and telling them where his money was six years ago. 

As a further, (but probably not final), insult the IRS won't even do him the courtesy of acknowledging receipt of this stack of paperwork he agonised over. The only way he can get that is to buy his own receipt by sending it all by registered mail. (I can imagine what that would cost from Australia). 

The fact that he is the beneficial owner of a "foreign trust" and sent in the 3520 and 3520a forms will quite possibly push him out of the "low risk" category into some limbo which will invite further scrutiny from the IRS. A foreign trust is a known red flag for the IRS computers. I sincerely hope it all works out well for JungleJim, but it's not a road I would go down personally. 

The irony of all this is that it doesn't benefit the US government either. Some poor schmuck at the IRS has to manually enter everything because there is no efiling from abroad. So it actually costs the US government to collect all this useless info.

When is this insanity going to end? Instead of worrying about US citizens living abroad, the IRS would do well to tackle the massive domestic tax refund fraud problem they have at home.

P.S. I have gotten no response from the IRS after sending three years worth of (quiet disclosure) nil-balance 1040's about a year ago. I have no idea if they ever received them and at this point I don't really care.


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## Transplant_DK

Lot of good points, although I have to admit I was extremely relieved to find out about this. I hadn't filed since moving 14 years ago, and at least one of the early years would have been a mess to deal with due to an estate settlement. From what I understand, I wouldn't have owed anything anyway, but I dreaded having to deal with it. 

So for me the benefit is that I can get up to date with less fear of them coming back at me for previous years. You're right that it was a huge PITA, and did take a lot of time. I guess it would have taken less if I'd filed each year as I should have. 

I did however expect there would be some kind of response or approval. Oh well...


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## RødGrød

You probably shouldn't expect to hear anything. Two years ago, I filed six years of returns and FBARS and an explanatory letter. Took me weeks to get all the forms filled out. I sent it registered mail and never heard back. After about six months I did get a weird letter from the social security administration showing that they had registered my payments over the last six years as "0", so I know that someone looked at the forms. 

I think the IRS has a six year statue of limitations to hassle you over FBARS, but as long as you didn't owe anything then I doubt you'll ever hear from them.


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