US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
Hi all,
I would like some guidance on my current situation.
I have resided outside of the US for more than a decade. I have filed taxes in the US and abroad all of those years. However, from information I have been going over this year, I am not compliant.
I have read most of the ways to become compliant and all of them are full of catch 22’s which you all already know.
My situation is this:
I have NEVER filed an FBAR, never heard of the thing until this year. My account years ago asked if I had an account where I am over 10,000USD. I asked was that USD or other currency and they said USD. The answer to his question was no, I don’t. But of course now I know this is wrong. I have had accounts where I am over a value of 10,000 USD for years. My accountant only brought this to light in 2009.
The second problem is that I am a teacher where I am, I do not work for a company, I mostly tutor students and it is a cash business. Either cash or account to account transfer within the country in that countries currency. That money is NEVER reported locally as the tax office here even doesn’t know how to help me file it, so I don’t. The problem is that I never filed that income to the US either. For some reason I thought it was tax free, even never filed it under the foreign earned credit, which is probably good as that would have been wrong too. I know now that that is self-employment income and I have to pay tax on that world wide. Which I have not been doing. I also have a small business, and that money gets funneled through a company account in the US and some personal accounts where I am. All of that money has been reported as self-employment as it has come from outside the US and outside the country I live. For that business I mostly worry not.
From both businesses I earn a profit of roughly US$30,000 a year. The business brings in about 5-10k and the rest of it is teaching income which has never been reported anywhere. So that leaves anywhere from 15,000-25,000 of unreported income for at least the last four years. It is much less before 2008/9.
My plan was to amend 3 years of returns and of course be compliant in 2012. However, reading information here some are recommending 6 years. I am not even sure I can go back that far…
I am not going to enter the ODVI program, nor am I going to make a quiet disclosure. And it seems I cannot enter the streamline program either. I have economic activity in the US, not all income is declared where I live now, I owe more than $1500 in back taxes each year, I have never filed an FBAR, I have many foreign accounts where I am even though many of them are below US$500, though many of them are above $15,000 too. I have source income in the US.
On advice from my new CPA they are telling me to file 3 years of amended returns, be compliant for 2012, file 3 years of FBARs and send a letter both with the amended returns and the FBARs stating reasonable cause for not filing earlier. The problem then becomes what about 2006-2008 returns? He thinks my risk of audit is low, and even if they do audit me for at least 2 of those years they are not going to find much. But the point is they will find something and I am worried they will think it is fraud… I know the statute of limitations is three years, but because I have never filed an FBAR, I don’t know what to do… This whole thing is complicated and time consuming and once I file 2012 FBAR I am worried that could trigger a red flag if it gets put in the system faster than I can amend the other three year returns and file FBARs for those years ago.
It seems no matter what I do to try to become compliant there is a huge risk to me. I am not hiding money, nor am I a millionaire, my income is very medial each year, it is already hard to live.
In addition to this, I am married to a local where I am, and sometimes she gives me money for savings, which raises the value of my accounts even more. For the last few months we have stopped this until I get this mess fixed.
I cannot afford to pay all these back taxes, penalties, etc. I believe I can handle 3 years of back taxes, provided they don’t penalize me for paying late. If I get nailed for FBAR penalties I will be in debt forever. Which doesn’t seem fair for simple mistakes. I don’t even understand why we need to tell them about our accounts, but complaining about it now is not going to help solve this any faster, so…
So based on my history, what are your thoughts? Any feedback would be appreciated. Thank you in advance.
@taxconfuzaled,
Ah, those OMG moments we have. I hope there is some comment to you from others. Nothing I could help you with — I’d probably be one that says you should talk to a US tax lawyer for advice. At any rate, I think you need more perspective than what your CPA is giving you. Some competent expert advice, extensive research at this site and “Our Resources” and comments from others who may help you on the road to finding what you should do in your situation. Another sad commentary. I wish you luck.
@Taxconfuzaled, I also wish you the best. I particularly empathize because, like myself, you had already been filing but not correctly. I agree that it appears less innocent to have under-reported foreign-sourced income than to have not known you had to file in the first place. You’re already in the system so it seems to me that you have no real other option than to become compliant, especially with the increased likelihood of being discovered if you haven’t, due to FATCA coming.
You will need to get legal advice as to whether you’ll want to amend or go forward. You’re in a murkier situation and it’s the technicalities that can be fraught with risks even if your omissions were inadvertent.
@Taxconfuzaled,
I agree with @calgary411 and @monalisa1776 that you need professional advice to deal with your complicated situation and to appreciate options. Yes, as Calgary411 recommends, you should also spend time going through this lengthy forum and the “our resources” link.
My understanding is that the IBS forum does not endorse or suggest any professionals and it seems that many of the commenters have had bad experiences.
There also appears to be a general reluctance of individual IBS commenters to disclose names of professionals who have actually been helpful (apologies if I am mistaken on this) and I have previously “complained,” perhaps naively, that information on those professionals with a good track record should be available–somewhere.
Once in this forum, I mentioned that I recently received what I felt was good advice from a company in Vancouver Canada at steve@stephenkatzltd.com
I contacted the company, which will do a free, quick telephone consult with you if you are interested. I would keep the discussion very focused. At least you will be receiving a second opinion.
I only claim that in my particular case I received what I felt was good professional advice. I have no ties or expectations with the company and provide no claim whether the company has the expertise to help you in your particular situation or could do so at a cost that you could afford.
Sorry and good luck.
@taxconfuzaled,
I felt your stress, reading your post – you have my utmost sympathies. You did not say which country you live in or which citizenships you hold, which I think could make a difference in how you handle your situation. For example, so far, Canada’s stance has been that it will not collect FBAR penalties or back-taxes incurred while you were a Canadian citizen living in Canada.
Also, FATCA is far from a done deal. Personally, I think that with all the blowback and outrage, it will be dead in the water a year from now, and citizenship-based taxation will also soon be a thing of the past – thanks to FATCA.
Legal advice can be helpful, but always remember that lawyers and accountants will always tell you what you should do to abide by the law. They likely won’t tell you that the law is unjust or might not be law soon if the good people at IBS, and others dedicated towards an end to citizenship based taxation have their way.
You have lots to think about, and more research to do. There is lots to read here at IBS. Take time to do your due diligence, be expedient but not rushed, and in the meantime try not to let it keep you awake for too many nights.
Also, hopefully, someone else here has some practical advice for your particular situation which I am not familiar enough with to comment on (non-filer that I am…ooops did I say that out loud).
Hi all, I actually did contact a couple of places to get tax advice about a month ago. PWC said they would do 7 years of returns for me for like $10,000 which I cannot afford. And of course they are big so they are going to go by the book. I have talked to various others that won’t even touch this, they want rich people and charge over 5,000 just for a consult. And still others tell me to enter the OVDI program. I am not a criminal, this was not willful and I will never bow down to that. I do not think the advice I am getting, so far, from the tax lawyers is reasonable, they mostly just want money, and I don’t know that I should spend more time calling more of them and spending more money for consults.
I have done quite a bit of reading on here, and through the ACA and other sources. It all boggles the mind, with 7 different ways to be compliant, but yet none of them the “right” way to do it, it just makes me wonder how anyone can be truely compliant. Because those who think they are, may find out in a few years that actually they weren’t. And even correcting this mess, I may find out years later that I still made mistakes.
I am a US citizen, one passport from birth. And I am currently not considering to renounce my US citizenship at this moment. All I will say is that I am living somewhere in Asia, and I can tell you that the country I live is currently negotiating with the US government over FATCA and I am sure it will pass, I called them today, the worry is that 30% withholding if they don’t comply with it, so I am sure the US government will yet get another country eventually.
WhiteKat, what you say makes me confused.. It is not the responsiblity of the Canadian government to collect FBAR penalties is it? That is the job of the US government. I have no idea what the stance is on this where I live. But I only have one passport. And where I live I have a visa only.
Even if FATCA is dead in the water in a year from now, it will take effect for all of those countries who signed up for it on January 1, 2014, so those caught in the middle of this, might be in bigger trouble yet.
The more and more I think about this the more stressed out I get. There is not right way or better way for me to do this because they all have an audit risk. My original thought was to do 3 years, now it might be 6, but even if I do this, I may end up with FBAR penalties through the roof that I would NEVER be able to pay, though I am not sure they would ever be able to collect them if I refuse to pay them. But then their are IRS penalties for back-taxes in the 1000’s… Originally I figured that I would end up paying around $15,000-20,000 for 2012 (normal tax) + three years back taxes (with or without interest, not sure how to calcuate this correctly), but that is without penalties. I could potentially handle this amount, but no more than that, as that would already wipe me for the next several years.
I saw the new Ways and Means document that came out and it looks better than what we have now, but holding out for that to become law means I would need to wait a year or more to become compliant right? And if it doesn’t go through and I wait, then it might be willful right? I just don’t know….. I had always thought I was filing correctly and that my CPA was telling me the right information about what he needed…
Another problem is years ago I may have taken the foreign deduction on self-employment income several times, not for all the income, but for some of it as I had sent that money back to the US and figured I had better report it as income, and so now we have yet another problem thrown into this. I just remembered about that… I do not think any tax laywer can truely help me with this and the cost would probably not outweigh the benefits based on the conversations I have already had and the information I have read.
I am so…. so…. I don’t even know the word for it… taxconfuzaled is the best way to describe it!
@taxconfuzaled
So sorry to hear about your situation. What you’ve reported seems to confirm the suspicion that the IRS is not interested in compliance, but rather in the penalties that result from non-compliance. They could easily gently remind anyone who is filing from abroad about the FBAR requirement, but instead they choose to remain silent and collect the penalties later.
Just one thing I wanted to mention (which apparently even CPAs aren’t capable of understanding):
The FBAR requirement of minimum $10K pertains to the aggregate value of the accounts. It’s not the case that only accounts > $10K have to be reported, but rather if the aggregate value of all accounts is > $10K, you have to report them all. For example, if you have accounts with maximum year balances of $8500, $2000 and $2.47, you need to report them all (yes, even the one with $2.47). Of course it’s insane, but those are the IRS rules.
I have more than 10 accounts, what I have been told is that they could levy a 10,000 penalty on each account that goes unreported on an FBAR or half the value of the account, is that right? or was that 100,000? I forget… If that is the case, the tax I would need to pay is somewhere between like 2,000 to $5,000, but the penalities would be more than the tax owed, so you might be correct. I was not trying to imply that they were more interested in the penalties but that could actually be the case. The fact remains is that as a tax payer we are supposively supposed to know about all these laws, and the IRS thinks that the CPAs should know everything so they take no responsiblity for a tax payer not knowing the law. It would have been nice to recieve a notice, either in the mail or with my new passport or a letter from the IRS telling overseas Americans how to file their taxes, but the tax system is so complex that my sitaution above, probably I still would have been out of the loop as I have income from multiple countries. And just like what you just said… they haven’t told me I should file the FBAR, so indeed they could be waiting to collect those high penalities when I do go to file my FBARs.. It’s really not reasonable!
In addition from what I remember the accountant told me this was only on US dollar accounts, not on local accounts, so again there was a communication and knoweldge deficiency. Whose responsible? The end result is the tax payer pays up or they sue their accontant and that could go either way.
I have already prepared my FBAR for this year but have yet to send it because I fear that by sending in my first one that I open the door and I will end up being audited before I even have a chance to collect all the information about the returns I wish to amend. I have so much anxiety right now it is unbelievable.
Is it at all possible that we could get together and make a case for a class action suit against the IRS? I am not sure what we would actually sue them for specifically, but I am tried of this, the law is so complicated that I don’t even think the IRS understands all of it… It’s gotten way out of control.. But anyway… we are stuck in it, and I have no idea what I should do…
nothing is insane…. lets just pay all our taxes and penalties and stop complaining .
Who said that LIFE is fair ?
@taxconfuzaled
I was referring to the criteria for reporting accounts based on aggregate maximum balances. Penalties are a completely different topic, but since you ask, this is what the official IRS docs say:
Civil and criminal penalties, including in certain circumstances a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent report.
and
A person who is required to file an FBAR and fails to properly file may be subject to a civil penalty not to exceed $10,000 per violation. If there is reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed. A person who willfully fails to report an account or account identifying information may be subject to a civil monetary penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation.
See http://www.irs.gov/pub/irs-pdf/f90221.pdf
Tough situation, and I wish you luck getting through this.
The way I see it, your big problem are the missing FBARs. Having other unreported income isn’t great, but penalties are much smaller.
I would maybe consider filling FBARs for previous years with an explanatory letter (look at some previous posts on this thread) and file all your income going forward.
There is still risk here, but I don’t think you have any risk free options anyway.
A lot of people don’t know the details of FBARs, one girl here was asked by her accountant if she had an account greater than 10.000$. She answered no, and didn’t fill out any FBARs. Her accountant should have asked about the AGGREGATE value.
notamused, yep I know.
What would happen if I submitted 6 years of back FBARS but only amend 3 years of returns. Putting myself in another mess right?
I had planned to file 3 years of past FBARs with a note, similar to the ones I found on IBS explaing that I didn’t know about the FBAR requirement and asking for no penalty to be given.
I think most Americans overseas have no idea of the FBAR requirement. What bothers me is that by admitting I didn’t know I open myself up to all kinds of problems, but those people who never say a word, the IRS may never find them, with FATCA, well, that is their biggest threat, but without FATCA, they may never be found. I almost wish I never knew about this.
@taxconfuzled I think AJ’s suggestion is pretty reasonable. Start filing correctly going forward. I would even just start filing the FBAR’s going forward as well. You aren’t high income and you are overseas, so i think the risk of audit is extremely low. My mother and sister thought they were compliant and then learned of FBARs. They started filing the FBARs going forward in 2009 and have not heard a word from the IRS. My mom had balances in her accounts in the high 6 figures. No accountant is going to tell you to do this but seriously consider it.
@Taxconfuzaled, I also think that just filing correctly going forward with both might be the most sensible way to deal with this. In fact if I hadn’t been able to find an affordable specialized tax preparer, I probably would have done the same.
With hindsight, I now actually believe I might have been able to come back into reasonable compliance without having to spend so much in accounting fees, especially as I am permanently settled abroad. But two years ago, the OVDI was being hard pushed everywhere and I was as scared as you are now.
I was desperate and because I panicked, I allowed myself to be railroaded into full compliance, which is inevitably very expensive. I concluded that I had no other option than to use an expensive accountant and amend several years when, in fact, I probably could have just filed going forward and would have probably been OK.
But because I decided I wanted to renounce in order to simplify my life, I still think I made the right choice for me because of the requirements to be able to declare five years full compliance when filing the final exiting paperwork. However, as you say you wish to maintain your citizenship, you could probably just file going forward since you’re a low audit risk. Another advantage is that because you’ve already been filing, your tax returns should be safe from audit after 3-6 years (3 for 2012 and 6 for your Fbars ).
2006’s tax returns and Fbar ‘s statute of limitations should have closed by July. So already the audit clock is running…the only problem though is that if you were audited, you could be in a lot of trouble.
It boils down to how much risk you’re willing to take. Logically, I’d imagine that the IRS won’t have the funds to go after loads of minnow Expats which is why they resort to fear to cudgel benign players into the OVDI spider web.
taxconfusalad you are getting good advice from iamquincy and mona.
@taxconfuzaled,
I have a friend who has lived in Canada for more than 30 years, has not become a Canadian (that is in the works), had not filed tax returns to the IRS since being in Canada. In 2010 she started to file both tax returns and FBAR forms. She did this with the help of a cross border accountant – absolutely no problem. They did send a ‘reasonable cause ‘ letter with the FBAR. She has not received any penalties. She does not plan on ‘relinquishing’ her U.S. citizenship when she naturalizes in Canada, but does plan on continuing to file going forward.
She would be considered ‘small potatoes’ by the IRS and is certainly not a tax cheat. Honestly did not know of her obligation to file.
Good luck to you. Like others, I think you should just file going forward and send in a reasonable cause letter with the FBAR.
@taxconfuzled, I wouldn’t send in any reasonable cause letter if you decide to file FBAR going forward. That would only raise a red flag. You would basically be saying that you messed up and you aren’t going to fix it! I would only file a reasonable cause letter if you decide to backfile FBARS.
AJ, iamquincy, mona, and tiger,
Thank you for your feedback.
Let me make sure I understand what you mean here cause I am in shock right now… You all think I should 1. File all 6 years of prevous FBARs if my total aggregate balances are over 10,000 in any one year and 2. Do not file any amended returns, just start from 2012 filing everything correctly? Is this right?
A few questions onthis then.
1. What happens when the IRS does find my FBARSs and feels the account balances in my accounts are much more than what I have been reporting?
2. This year I have some accounts over $20,000 as a high balance. What causes this is simple. Account A needs to get transfered to account B, and then from account B it goes to C where I can then get a check to send in USD to my US bank. I did not mention it but I send quite a bit of money back to the US every year. I transfer money between my accounts frequently for budgeting, so the amount of money they may think I have is actually higher than what I have, which is really not good.
3. If I were to do this should I send all 7 FBARs together before June 30 this year? or send this years first and then send the previous 6 together sometime before the en dof the summer? (2006-2012)
4. If I were auited, my concern would be that perhaps I and the IRS may think that the unpaid tax was wilful because I knew about it. When they auit me they will find an additional 15-20k of income every year that I did not report. If FATCA goes through and they have my account details they may wonder about the income. OR do I claim I thought that money did not need to be reported because it was self-employment income outside the US and I did not know about the world wide issue with that?
5. Are any of you who recommend this either tax lawyers or tax accountants?
6. My accountant mentioned that I am low risk and even told me that perhaps I should think about doing this, he gave me a few options and this was one of them.
7. What about form 8938? Just file from going forward also? In years past I broke the threshold of 50,000 aggregate at least one year I think, or is that per account? And how are sub accounts treated with this? If sub accounts are still accounts, which I think they are, then I never went over the 50,000 mark in any one account, total yes, but not aggregate.
Thank you all!
@ taxconfuzled
Maybe this will help a little. The $50,000 (aggregate) threshold is for US citizens living in the USA who have overseas accounts. The amount is higher for US citizens livings outside the USA.
http://www.irs.gov/Businesses/Corporations/Do-I-need-to-file-Form-8938,-“Statement-of-Specified-Foreign-Financial-Assets”%3F
If you are a taxpayer living abroad you must file if:
* You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
* You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.
@taxconfuzled, I am saying also file your FBAR going forward. I’m sure most people have the same situation that you describe with the balances in your accounts not truly representing your net worth. Also, you don’t need to file 8938, like Em explained. You are very low risk and you are not worth the time, money or effort to audit. I’m not a tax accountant or tax anything. Just one opinion.
Em is correct. @Taxconfuzaled, if your total combined worth of your non-U.S. assets (not counting the value of your residence) was under $200,000, you wouldn’t have to file 8938. The fact that I did have to was probably the main reason I was too scared not to amend several years and pay all the tax.
If you don’t have to file 8938, you have a lot more room to maneuver. On the other hand, having to fully disclose all my accounts and assets directly to the IRS was essentially a warrentless search. My accountant informed me that the bulk of my assets were unfortunately in ‘foreign’ mutual funds which were thus subjected to PFIC taxation and would each require a separate 8621 form.
To not have honestly disclosed this information on 8938 starting in tax year 2011 could have been deemed willful so the stakes were too high for me not to also amend the earlier years with still-opem statutes of limitation. I thus felt frozen in the headlights with no room to maneovre. Of course, my accountant, being an enrolled agent, has to protect the U.S. government’s interests so it essentially had to be all or nothing.
I will always regret that I’d fallen into complacency and had naively assumed I could do all my financial planning like other residents of Britain. I had been oblivious to all the anomalies. The U.S. system is set up so you need to rely on professional advice. There’s a whole industry set up around accountants, financial planners and attorneys.
I’ve cynically concluded that their role is ambivalent at best. In other words, they’re bleeding me dry. I will have had to shell out over $20,000 for my tax preparer and $4000 to set up a relationship with my certified financial planner so I could move my investments out of PFICs into a U.S.-friendly portfolio; plus, this advisor has annual charges of a half % of the total value of the portfolio which adds up over the years.
Once you become compliant though there’s no turning back; my accountant is pedantically correct so I couldn’t file as a DIYer any longer, going forward. I was originally hoping to be able to maintain both citizenships until I became aware that I would continue having to annually budget as least $2000-$3000 for the rest of my life just to file an acceptable tax return.
In fact my preparer warned me that if I had not renounced this year, my ongoing fees would have risen to more like $5000 because changes in how foreign personal pension plans will have to be annually reported, probably as foreign trusts, etc. What a nightmare…I concluded that I was too embedded in the British system to ever be able to be affordably compliant to the IRS. I am sure now that I made a wise decision to renounce.
I will always feel bitter though how the U.S. system effectively raped me though.
I am grateful that my accountant believes I had reasonable cause and kept me out of OVDI but I have had to curtail any hopes of early retirement though.
The point I’m making is that my having to file 8938 meant I had less options since I had to list out all my accounts directly to the IRS, in addition to what I filed on my FBAR.
If you have to file 8938, then I think you’d have to amend possibly as far back as 2007 (since 2006’s SOL’s will close very soon). At the very least, I’d consider amending years 2009-2011. If you’re going to file delinquent FBARs, I’d file 2012 before the 30 June deadline but bear in mind that I would file the earlier years ideally back to 2006 or at least 2007 with a letter begging reasonable cause even before the deadline for 2012!! They not only have to be filed but have actually arrived by the deadline so be very careful.
On the other hand, if you don’t need to file 8938, I’d be inclined just to file your first Fbar for 2012 and just go forward from there without any reasonable cause letter. I’d also just file going forward with all the correct foreign income.
If you are self-employed abroad, you should still qualify for the foreign earned income exclusion up to close to around $97,000 annually; plus your foreign interest should be mostly covered by foreign tax credits. The only double taxation you should suffer is from your self-employment social security taxes which might also be covered in your host country’s tax treaty.
And for God’s sake, get yourself compliant with your local tax authority!! Good luck.
I still think you need to seek legal advice though because I don’t want Isaac Brock Society to appear to be overtly encouraging tax evasion. But you’ll have to do your ‘due diligence’ and develop an awareness of nuances in the advice you receive… keep reading on here as well as all the relevant external links listed here on this wonderful site.
@ Mona Lisa …. I think we covered your subject regarding accounting fees already but I repeat : I IS NOT NECESSARY TO PAY SUCH HIGH FEES ! You are living in London and you are using an EA not even a CPA or MasterCPA …… I had such an experience once and I found a MasterCPA back in the US who does our taxes for a flat fee of $750.00 and our AGI is > $800,000….. you on the other hand make < 25,000 and have to justify to yourself why you paid what you paid but it was not necessary.
@Anon, I’m trying to justify it to myself, *Lol* 😛
What could potentially happen to me if I am audited or asked why I did not file previous FBARs? With FATCA looming my concern is they will figure out with the amount of money in my accounts that I should have been filing FBARs earlier. I think totally the cash value of all of my accounts combined is not more than USD$75,000-80,000. I think it is less than that. My concern is not the tax owed, my concern is the penalties that I could incure for not filing those back FBARs and the back taxes owed.
@Taxconfuzaled, your fears about a possible audit of your tax returns and Fbar was why I decided to amend rather than go forward. You’ll have to decide whether you’d rather take some pain now with double tax and higher accounting fees but for greater peace of mind.
I would have just done the go forward if I couldn’t find an accountant whom I trusted or could afford. At the time, especially with all the publicity of OVDI, I’d assumed that the U.S. was no longer recognizing nuance and that they were now enforcing tax law rather like drugs laws. I feared they no longer recognized shades of grey.
You will have to decide what risks you can live with. But off the cuff, I’d guess that you’re still reasonably safe to just file going forward, especially for the tax returns. You might want to consider filing six years of Fbar with a letter begging reasonable cause but I feel you share the same dilemma I had in that it seems possibly less innocent to have been under reporting income than to have not known you had to file.
This is why you need to seek legal advice, unfortunately. One thing in your favour though is that you’re obviously not a whale. One thing in your favour though is that because you’ve already been filing, your earlier returns already have their statutes of limitations running.
Someone who’s never filed has completely open statutes of limitation, unlike you. So there are pros and cons to either filing incomplete returns or not to have filed at all. I would, however, think that someone like you living abroad showing ‘ordinary due diligence with your past filing could still seem more innocent than a wealthier investor worth millions claiming they had no idea they had to file, etc.
After all, Nina Olson acknowledged that it’s almost impossible for minnows living abroad to be in full compliance due to all the complexities of U.S. tax law. I think you should be OK, especially as Fatca isn’t even yet a done deal, plus even if it goes through, the IRS won’t even start receiving reports on U.S. persons from foreign financial institutions till April 2015.