The United States has an unusual tax regime: it taxes its citizens and residents on their worldwide income, not just on what is earned in the United States. The only other country that does this is Eritrea. Can you even find Eritrea on a map? What else does it have in common with the United States?

Because of this regime, the US government has always pressured tax haven countries to disclose more of their account-holders’ data. Diplomatic efforts have finally cracked open the Swiss banking system: after centuries of secrecy, Swiss banks are now required to disclose the names of their US account holders to the US Department of Justice.

US taxpayers have been required to report these accounts for years. However, taxpayers treated this requirement as voluntary, since there was no way for the IRS to verify unreported foreign investment earnings in the absence of reporting by the foreign banks. No longer.

Foreign nationals living in the US and US citizens holding foreign bank and investment accounts must file FBARs (Foreign Bank Account Reports) annually. When they haven’t been filed, the taxpayers must file reports for past years. Fines are staggering: up to 50% of the account’s value for every year missed. It’s possible to rack up more in fines than the account is worth.

If you know someone with this problem, I can help. Have them call me.