# Writing non-willfulness certification for streamlined procedures



## ok2016

Hi there,
I'm almost done preparing the documents for the streamlined foreign offshore procedures (I hired an accounting firm to help with the returns, did most of the FBARs myself) and I'm finishing up writing the non-willfulness certification on form 14653.

I've been pretty stressed about writing the certification in such a way that will not put me in a bad light. I've got a high level of education (but NOT in accounting or law - numbers confuse me) and I've lived in the US on and off for almost 15 years (lived overseas 2012-2014). So I've read that IRS might think I should have been aware of the reporting requirements given my background - but I wasn't! They don't exactly advertise it unless you read their news releases.

I owe about $7,500 in taxes based on the 3 amended returns and the highest my foreign accounts ever were was about $115,000. I've paid taxes in the foreign country and in the US, on the respective income.

My question: Should I employ a lawyer to go over my non-willful certification? Is that overkill? The two lawyers I've asked charge $2500 for "reviewing the whole streamlined package", which seems a bit steep to me - I mean, I've already done everything including the statement. They've been telling me how risky it is to write that statement on your own. Is it really?

Would be grateful for any feedback- thanks!


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## Bevdeforges

Maybe I've been living in France too long, where if you revert to a lawyer you are automatically suspect, but I would stay away from having a lawyer review your certification. Your best approach is to keep it simple, and keep it honest.

There are loads of folks living overseas who still don't realize they are "supposed" to be filing US taxes. Or who think that the whole thing about "no double taxation" means that if you file in your country of residence, you don't have to file back in the US. It can be difficult to keep up with changes in the tax laws, too, when living overseas particularly if you don't have all that many ties back to the Old Country.

Use the actual reason in your statement, but state it briefly and simply without trying to make excuses or apologies. They've seen worse - usually from those owing millions in back taxes.
Cheers,
Bev


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## ok2016

Thanks so much Bev! I'll stick with preparing it myself.


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## LC3622

ok2016 said:


> Hi there,
> I'm almost done preparing the documents for the streamlined foreign offshore procedures (I hired an accounting firm to help with the returns, did most of the FBARs myself) and I'm finishing up writing the non-willfulness certification on form 14653.
> 
> I've been pretty stressed about writing the certification in such a way that will not put me in a bad light. I've got a high level of education (but NOT in accounting or law - numbers confuse me) and I've lived in the US on and off for almost 15 years (lived overseas 2012-2014). So I've read that IRS might think I should have been aware of the reporting requirements given my background - but I wasn't! They don't exactly advertise it unless you read their news releases.
> 
> I owe about $7,500 in taxes based on the 3 amended returns and the highest my foreign accounts ever were was about $115,000. I've paid taxes in the foreign country and in the US, on the respective income.
> 
> My question: Should I employ a lawyer to go over my non-willful certification? Is that overkill? The two lawyers I've asked charge $2500 for "reviewing the whole streamlined package", which seems a bit steep to me - I mean, I've already done everything including the statement. They've been telling me how risky it is to write that statement on your own. Is it really?
> 
> Would be grateful for any feedback- thanks!


I would be very concerned with this form. Any information might be used against you. Very dangerous.


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## ok2016

So what would you do if you were me lucenet?


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## Bevdeforges

lucenet said:


> I would be very concerned with this form. Any information might be used against you. Very dangerous.


It's not worth getting paranoid about it. $7500 over a three year period is not a terribly huge tax bill. And $115,000 in foreign accounts doesn't exactly suggest large scale tax evasion.

As with all government filings (not only the US government), keep your statement brief, concise and strictly factual. But unless you have significant foreign holdings and/or large potential amounts of unreported income or unpaid taxes, it's very unlikely the IRS is going to come back to you about any of it.
Cheers,
Bev


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## LC3622

ok2016 said:


> So what would you do if you were me lucenet?


It is a good question. Not sure. But the streamlined program provides absolutely no assurances. I would ask for a legal advise, but some tax lawyers charge USD 800-1000 per hour (totally ridiculous) and will definitely charge at least USD 5,000+ to review/help with the form. 

The whole system is just corrupt.


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## LC3622

Bevdeforges said:


> It's not worth getting paranoid about it. $7500 over a three year period is not a terribly huge tax bill. And $115,000 in foreign accounts doesn't exactly suggest large scale tax evasion.
> 
> As with all government filings (not only the US government), keep your statement brief, concise and strictly factual. But unless you have significant foreign holdings and/or large potential amounts of unreported income or unpaid taxes, it's very unlikely the IRS is going to come back to you about any of it.
> Cheers,
> Bev


It is not tax evasion. US government has nothing to do with this income. It is an unfair citizenship tax. If you are not a resident of a country, do not use its infrastructure, roads, hospitals, etc - - why should you pay anything? All countries in the world (at least, all developed countries) accept this and have residence based taxation. Yet, "the greatest democracy on earth" penalises its own citizens (and in many cases accidental citizens who are citizens of other countries) for choosing to live abroad.


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## iota2014

lucenet said:


> It is not tax evasion. US government has nothing to do with this income. It is an unfair citizenship tax. If you are not a resident of a country, do not use its infrastructure, roads, hospitals, etc - - why should you pay anything? All countries in the world (at least, all developed countries) accept this and have residence based taxation.


I doubt very much if any of the RBT countries chose residence-based taxation because of such considerations. Countries choose the taxation basis that they reckon is best for their economy. CBT is difficult to enforce - even for the US. That's why most countries don't bother.



> Yet, "the greatest democracy on earth" penalises its own citizens (and in many cases accidental citizens who are citizens of other countries) for choosing to live abroad.


Renunciation is often the best solution. Worked for me.


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## LC3622

It is really the only option actually for someone who chose to permanently live abroad, makes reasonable income (and has retirement plans, investments in the countries where they live) and has no intention to return to the states. 

I just cannot believe US does this to its citizens. I am still shocked by all the implications.


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## ok2016

Yeah, renunciation isn't an option for me. I'm back in the US now. I am shocked, too, by how draconian this system is. Feudalist medieval Europe has nothing on the US. 
I found a firm that will review my non-willful certification statement for $300. I will send it in just to see what they say. After that, I'm walking into the lion's den I guess and hope for the best.


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## LC3622

ok2016 said:


> Yeah, renunciation isn't an option for me. I'm back in the US now. I am shocked, too, by how draconian this system is. Feudalist medieval Europe has nothing on the US.
> I found a firm that will review my non-willful certification statement for $300. I will send it in just to see what they say. After that, I'm walking into the lion's den I guess and hope for the best.


Well, the country is literally bankrupt and treats its citizens as life long slaves. If you abandon your master, you are penalised for doing so as some tax breaks available to residents are not available to non residents. No double taxation is a complete BS. This works only if one's income is moderate and earned (below FEIE), she has no investments or lives in a country with very high taxes. US citizens living and working hard in zero or low tax countries and/or have investments/retirement plans are totally screwed and are taxed for services they do not receive and will never receive and with absolutely no representation! In fact, the "stacking rule" penalises expats even more as it taxes many in the 30%+ tax bracket on otherwise 10-15% bracket income. The whole system is unfair, corrupt and I am not sure if it is legal. Sorry to say this, but it is true.

A lot of countries/people in the world truly hate US for its invasive geopolitical program and wars. It is sad, but true. Now, many US citizens hate their own country because what happens with FATCA and level of penalties is just unprecedented.


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## LC3622

btw, I do not know your personal situation of course, but since you are in the US already, you need to make sure you can actually submit via the offshore foreign streamlined - it is more beneficial as there is no 5% penalty as in offshore domestic streamlined, but IRS can get nasty if they see you are already in the US/have assets there. Claiming non-wilfulness in your case might be even more difficult that in case of many others who actually live outside the US, pay taxes in their countries and have nothing to do with the US for many years!


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## ok2016

I still qualify (returned in 2014). Once I pay the back taxes, there will be no foreign assets left LOL.


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## Marie2016

ok2016 said:


> I found a firm that will review my non-willful certification statement for $300. I will send it in just to see what they say. After that, I'm walking into the lion's den I guess and hope for the best.


hello, can you share the name of the firm? Were they helpful? I'm at exactly the same point. Found a firm but said they had to do the whole process with them for assistance with the certification statement. Thanks!


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## ok2016

Marie, I was a bit disappointed to tell the truth. They suggested that I downplay my education and restate my profession as something else. And that felt kinda odd.

BTW, Is it allowed to list company names here?


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## Bevdeforges

ok2016 said:


> Marie, I was a bit disappointed to tell the truth. They suggested that I downplay my education and restate my profession as something else. And that felt kinda odd.
> 
> BTW, Is it allowed to list company names here?


Not if you're doing a "name and shame" post. Honestly, I'm not terribly surprised that a company reviewing your non-willfulness cert would make such suggestions. What is needed is a simple statement of the truth, whatever that might be. Having your statement "reviewed" for a fee kind of suggests that maybe things weren't as "non-willful" as you are trying to indicate. 

So far, we have few, if any, instances of a sincere non-willfulness certification being denied. I half suspect the IRS may simply be collecting statistics on those who don't file (unless, of course, someone files something really outrageous). I would also suspect that it could draw unwanted attention to your certification if you use "familiar" excuses or phrases that are known to be the sorts of things a paid adviser might suggest.
Cheers,
Bev


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## ok2016

I was nonwillful. But, I have an advanced degree, I worked internationally, and I've been reading on all those lawyer blogs that high level of education etc. may work against a streamlined filer. That said, my field is humanities, NOT accounting or law and my level of financial sophistication is that of an average person. I think I've been freaking myself out too much but it's hard not to, given how this system is set up.


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## Bevdeforges

ok2016 said:


> I was nonwillful. But, I have an advanced degree, I worked internationally, and I've been reading on all those lawyer blogs that high level of education etc. may work against a streamlined filer. That said, my field is humanities, NOT accounting or law and my level of financial sophistication is that of an average person. I think I've been freaking myself out too much but it's hard not to, given how this system is set up.


The IRS is rather well known for using "shock and awe" tactics - trying to appear far more threatening than they are. I think, too, that folks in the US hugely overestimate the availability of US news and information out here in the "rest of the world." Most folks I talk to back in the US (including some who are accountants) are surprised to find out that overseas residents still have to file US returns. 

Back when they sent out the overseas residents booklets each year if you had filed the previous year, that was about my only source for information on tax changes from year to year. Now that they don't do that any more, you have to seek out the information for yourself - and most of us have better things to do with our time than to search the Internet for what has changed. 

Unless you're in the upper brackets and/or have complex and bizarre investments that look like they might be designed to evade taxes, you can usually manage with a good faith effort to file the forms to the best of your ability. Generally speaking, they would contact you first if there was an "anomaly" of any sort that might lead to more taxes. But now that they have shut down all the overseas offices, it remains to be seen how much follow-up they can afford to do on us "little guys" overseas.
Cheers,
Bev


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## Marie2016

ok2016 said:


> I was nonwillful. But, I have an advanced degree, I worked internationally, and I've been reading on all those lawyer blogs that high level of education etc. may work against a streamlined filer. That said, my field is humanities, NOT accounting or law and my level of financial sophistication is that of an average person. I think I've been freaking myself out too much but it's hard not to, given how this system is set up.


This is me too, and freaking out as well both by the IRS wording and what the lawyer blogs say. One said that they draft statements 4 pages to 20 pages! Many are just jumping on the band wagon trying to generate fees from people like us.

Have you sent it already? How long was your statement.

Thanks Bev, think I'm going to bite the bullet and just do it. I have an MBA which is obv a negative, but my undergraduate was also humanities and I'm foreign born and raised.

thanks to both.


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## Nononymous

I would think that a simple statement along the lines of "I was unaware of the requirement to file US taxes and/or FBAR forms while resident in another country" would be sufficient in 99.99 percent of cases. The less said the better. Whether it's true or not isn't really something they can prove without a coerced confession.


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## Nononymous

Nononymous said:


> Whether it's true or not isn't really something they can prove without a coerced confession.


Or a serious investigation of your internet activity and discussion-board posting history...


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## celticweb

I posted this in another thread here but everyone is getting too hung up with this certificate. yes I know the language makes people nervous but if you were non-willful, you were non-willful, end of story and they can't prove otherwise and nor would they waste resources in my view. 

as i posted before I wrote basically a one liner for my certificate and it was accepted. A one liner of true facts, born a dual citizen, left the US at an early age and didn't know I needed to file tax returns or fbars. all true facts and this was using the new form. no story about my financial history or education. btw i am college educated but work in a field far removed from tax and accounting. 

I spoke to one of those accountants early on in my journey that wanted to write a long story for me and waiver of penalty letter. I ran a mile from that. I thought the streamlined was waiving penalties! If you are a normal person, stay clear from scaremongering of this sort or language intended for money launderers and tax evaders.

Write a simple statement of true facts. Good luck!


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## iota2014

The revised certification form seems to strongly discourage writing "a simple statement of the facts."


> Note: You must provide specific facts on this form or on a signed attachment explaining your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Any submission that does not contain a narrative statement of facts will be considered incomplete and will not qualify for the streamlined penalty relief.
> Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/ management decisions. Provide a complete story about your foreign financial account/asset. If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts. The field below will automatically expand to accommodate your statement of facts.


That's why the tax advisors don't want their clients to submit a simple honest statement of the facts. 

The certification form - even in its previous, comparatively innocuous form - was the reason I changed my mind about entering streamlined and chose instead to just backfile. The assumption behind streamlined is that all applicants are "in need of amnesty", as another poster to this forum once described it. Why else would you want to enter an amnesty programme? Streamlined is not designed for the innocent. (IMO)

If you didn't know about US filing requirements, common sense suggests you're not a criminal and you're not in need of amnesty. Ignore the threats, forget about streamlined, backfile, renounce, and be happy.


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## celticweb

My accountant told me they changed the certificate rules because will-full people who were clearly evading taxes were trying to sneak through the streamlined program which is not for them. i still think the majority will be safe with a simple statement of facts if they are true facts. Not intended as legal advise but just letting people know my experience.

Even if one did have an inkling of filing, the average expat owes zero. what are they negligent over exactly, filing a zero tax owing return? It's the Fbar penalties that made me agree to enter the streamlined and having the clock stopped for prior years so I didn't have to drudge up any more return information. Most average tax payers were non-willful of Fbar for sure. Very few people even heard of it never mind thinking such a thing would even exist. I was more worried about filing the tax forms correctly than the certificate.

Back filing is a possibility of course. Whatever one is comfortable with. I actually did the IRS a favour by filing and entering the system. I had absolutely no reason as an accidental American. It was because I didn't want to cross the line from non-willful to willful that I even filed.

and yes Iota is right, just back filling is an option especially with zero owing tax and be happy and not let this stuff take over your life.


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## iota2014

celticweb said:


> My accountant told me they changed the certificate rules because will-full people who were clearly evading taxes were trying to sneak through the streamlined program which is not for them.


I agree that's why they changed it, but I disagree with the last bit. I think willfull tax evaders is exactly who it's designed for. It's like a plea bargain: 'come clean, give us the courtworthy evidence, and in return, we'll let you off.'



> i still think the majority will be safe with a simple statement of facts if they are true facts.


I agree - they probably won't be interested in the certification form at all (IMO) unless there are substantial sums at stake. 



> Even if one did have an inkling of filing, the average expat owes zero. what are they negligent over exactly, filing a zero tax owing return?


The average expat only owes zero tax if they file the return claiming FEIE and/or FTC. If they haven't filed, in theory they do owe tax but in practice it always comes back to the same point: the IRS probably isn't going to bother chasing unless they have, or hope to obtain, courtworthy evidence of evasion. IMO, as always.



> It's the Fbar penalties that made me agree to enter the streamlined and having the clock stopped for prior years so I didn't have to drudge up any more return information.


If a person hasn't been committing tax evasion in the past 3 or 6 or whatever years, they probably weren't committing it in prior years either, and are just as safe from the IRS for Y1990 as for Y2015. IMO




> Whatever one is comfortable with.


Absolutely.


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## iota2014

I said:


> I think willfull tax evaders is exactly who it's designed for.


Actually, I think this heinous misuse of words like "wilful" is at the crux of the unfairness of American approaches to tax collection.

How can you "non-wilfully" be guilty of committing tax evasion? If it was "non-wilful", it's a mistake, not a crime.

The answer seems to be: they want to be able to collect horrendous penalties even when there is not sufficient evidence to meet the standard required in the criminal courts. So they disingenuously label the behaviour as "non-wilful" in order to have the ability to get the case tried under the less stringent standard applicable in the civil courts (when there's enough money at stake to make it worthwhile).

And the result is that a lot of completely innocent people feel terrified because the language makes it sound like the IRS has the power to wipe them out, even though they are entirely innocent of wrongdoing.


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## celticweb

I know they say that you need to file to get the exemption but that's not logical to me. either you owe tax or you don't. I have thousands of tax credits for passive income just for those 5 years, and i would probably get even more if i had to back file further. I also paid a lot of tax on my wages even without the Foreign income exemption. the foreign income exclusion is not the only way to zero out your tax I agree it's good in the sense that it makes the tax filing easier to do yourself. 

I am not sure about your theory about the tax evaders for streamlined. i think this method came about is because they realised that there are non willful tax payers out there and it's not a myth, there really are out there. they wanted to bring them into the fold so they would be a tax source for the future. of course if they find a tax evader, they have facts then to use against you. however They have to have some sort of basis to prosecute people with a statement of facts that warrant it in the first place. There is a clear definition of tax evasion and working abroad and paying taxes to your country of residence doesn't equate to tax evasion or money laundering.

Everyone has different facts so needs to weight up their situation, determine if you owe tax then make up your mind, determine your risk level, etc and make an informed decision.

as i said previously i filed all three ways, 2011 quiet disclosure because i decided to renounce, 2012-2014 streamlined, 2015 on time. so i think that if you owe zero tax you are going to be OK with any method. and never heard a peep from them and they might not even be reading the certificates for presentable zero tax returns.


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## iota2014

> i think that if you owe zero tax you are going to be OK with any method. and never heard a peep from them and they might not even be reading the certificates for presentable zero tax returns.


Yep, I agree. Or in most cases even if you do owe tax, given the difficulties of collection.


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## Bevdeforges

Just another corner heard from here. What is now called the "streamlined compliance procedure" (or whatever) used to be just the standard operating procedure for folks living overseas who "all of a sudden" found out or realized they were supposed to have been filing. The idea was that if you backfiled for those three years and didn't owe anything (or not much) they would "forgive" the years before that sight unseen. Has to do with squaring up the statute of limitations (i.e. 4 years) with the little detail that undeclared income remains open to audit forever with no statute of limitations applied.

The FBAR kind of fouled things up, though it has been around for ages. Just that under FATCA they seem to have started taking it seriously. However, even there, they don't really get too serious about non-filing until and unless they "find" something that could lead to significant audit points and thus to large amounts of "evaded" taxes.

But it still seems to be the case that, in order to assess penalties and fines, they first have to audit you - usually for something specific in specific years. Each IRS auditor is expected to "return" a certain minimum average in unpaid taxes and penalties on their overall audit cases. So, as long as you show that there's little or no likelihood of finding anything untoward in the returns you do file, it's highly unlikely you'll be bothered with an audit. If they were looking for "easy pickings" for fines, they'd probably send out notices to everyone who doesn't file in a given year - even those who are legitimately not required to file for lack of income exceeding their filing threshold.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Just another corner heard from here. What is now called the "streamlined compliance procedure" (or whatever) used to be just the standard operating procedure for folks living overseas who "all of a sudden" found out or realized they were supposed to have been filing. The idea was that if you backfiled for those three years and didn't owe anything (or not much) they would "forgive" the years before that sight unseen. Has to do with squaring up the statute of limitations (i.e. 4 years) with the little detail that undeclared income remains open to audit forever with no statute of limitations applied.


Was a certification form required? It would be interesting to see if/how the language has changed since then.

It's the certification form that is objectionable (IMO) because it more or less obliges all users to sign an open-ended confession of ("non-wilful") iniquity, under penalty of perjury, _just in case_ there's been any wrongdoing. That's not how justice is supposed to work.



> The FBAR kind of fouled things up, though it has been around for ages. Just that under FATCA they seem to have started taking it seriously. However, even there, they don't really get too serious about non-filing until and unless they "find" something that could lead to significant audit points and thus to large amounts of "evaded" taxes.


From what I've read, it seems to have stemmed from the launch of the Swiss bank program (https://www.justice.gov/opa/pr/unit...tatement-regarding-tax-evasion-investigations), 

the discovery that foreign account information could be obtained from the panicking banks despite local privacy laws (Federal Tax Crimes: U.S. Expects the Swiss Bank Initiative to Produce Information on Account Holders and Bank Professionals (3/19/14)), 

and the subsequent tendency for Swiss banks to put pressure on their US customers to enter the OVDP (Federal Tax Crimes: Swiss Banks' Requests to U.S. Depositors for Waivers and Proof of Entry Into OVDP (6/11/14)).

The Swiss bank program combined with FATCA and the IGAs thus (a) showed that the US Treasury/DoJ did have the power to destroy banking secrecy promises offered to US customers by foreign banks, and (b) showed that forcing foreign banks to identify their US customers could be used to drive expat tax/FBAR compliance.

And the sudden influx of totally innocent expats into an "amnesty" program designed for actual tax evaders, soon led to the creation of a second, less scary "amnesty" program, designed to capture evidence and jurats from the non-filers who weren't joining OVDP.



> But it still seems to be the case that, in order to assess penalties and fines, they first have to audit you - usually for something specific in specific years. Each IRS auditor is expected to "return" a certain minimum average in unpaid taxes and penalties on their overall audit cases. So, as long as you show that there's little or no likelihood of finding anything untoward in the returns you do file, it's highly unlikely you'll be bothered with an audit. If they were looking for "easy pickings" for fines, they'd probably send out notices to everyone who doesn't file in a given year - even those who are legitimately not required to file for lack of income exceeding their filing threshold.


Indeed. Minnows are not of interest.


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## Bevdeforges

No, there was no certification form required back in the old days. Those who asked at the IRS office in the consulate (Paris) were told simply to file 3 years back plus the current year and all would be forgiven. It was a regular old late filing, but with no penalty for most folks, who owed nothing.

There was always the implicit "threat" that if the IRS for some reason audited you or "looked into your situation" they would calculate your back taxes without the FEIE, and at that point you couldn't backfile to take the election. But why they would bother looking at a foreign resident's taxes if they hadn't been filing is anyone's guess.

On FATCA, the main thrust has been trying to establish and enforce an obligation on the banks and other financial institutions to report some form of data to the IRS. But that's a separate matter between the IRS and the foreign financial institutions. True, they are looking for "secret" accounts. But there is no evidence that they run even a cursory check of what they have on file from the FBAR filings against what they get from the foreign banks. 

Minnows really aren't of any interest. So sometimes it's a big advantage to swim with the minnows.
Cheers,
Bev


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## iota2014

> On FATCA, the main thrust has been trying to establish and enforce an obligation on the banks and other financial institutions to report some form of data to the IRS. But that's a separate matter between the IRS and the foreign financial institutions. True, they are looking for "secret" accounts. But there is no evidence that they run even a cursory check of what they have on file from the FBAR filings against what they get from the foreign banks.


They obviously _could_ do it though, if they chose to do so in a particular case. And, more significantly for a lot of people including me, FATCA intervenes in one's relationship with the banks one relies on. That's the lever, and a very effective lever it has proved to be.

I agree compliance wasn't the initial motivation for FATCA. Personally I agree with the view that it was the G5 IGA proposal that led to the realization of just how amazingly, globally effective FATCA could be in enforcement. Hence its transfer to the category of "Strategic Revenue-Producing Initiatives", presumably. It's definitely not just a matter for the IRS and the FFIs. IMO.


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