there were people who simply did not realize they had U.S. filing obligations while living
abroad but they needed an opportunity to catch up without fearing bankruptcy. The
program is remarkable because it offers compliance with no penalties for people who are
able to use it. In the U.S. tax system, penalties can be quite substantial and far more than
the taxes actually owed.
There was never a deadline attached to the Streamlined Filing program but it was notexpected to be open indefinitely. And this was confirmed at a speech by the IRS commissioner in December last year when he said at some point they will assume people have had enough notice that they should have become voluntarily compliant. When the IRS is making these kinds of statements publicly, you can expect a deadline to be announced soon.
After much debate and a court case to try and stop it, the Foreign Account Tax Compliance Act
(FATCA) came into effect in 2015 and the first information share between the Canada
Revenue Agency and the IRS happened in September. FATCA allows the review of
information from financial institutions to identify U.S. citizens living abroad who may not
be tax compliant.
While FATCA may be a tool for the IRS to find tax cheats, it is having unexpected
consequences whether U.S. citizens are tax compliant or not. For example, some U.S.
citizens living abroad are unable to get mortgages because the bank does not want to deal
with FATCA requirements. Others are finding they cannot open bank accounts for the same
If FATCA wasn't enough, new legislation was introduced in December that now gives the
IRS powers connected to U.S. passports. When the announcement came out, it was easy to
dismiss because the new law allows passports to be revoked if you owe $50,000 or more in
It seems unlikely that the average taxpayer would owe that much. But the fines in the U.S.