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“Delinquent FBAR Filing Procedures”: The IRS Webpage Is Gone, but the Real Questions Remain
“Delinquent FBAR Filing Procedures”
There has been considerable commentary—and some concern—about the IRS’s removal, around the end of June 2026, of its longstanding webpage titled “Delinquent FBAR Filing Procedures.” The IRS originally created those procedures in 2014.
The disappearance of the webpage is noteworthy. But it may not be nearly as important as some commentators suggest.
TIGTA report: $157 Billion of Potentially Unreported Foreign Accounts?
As the TIGTA reports: “Foreign financial institutions (FFI) are required to File IRS Form 8966, FATCA Report, to report information about financial accounts in which U.S. taxpayers hold certain ‘ownership interests.'”
TIGTA noted that foreign financial institutions report U.S.-owned financial accounts to the IRS on Form 8966, FATCA Report, while U.S. taxpayers separately report specified foreign financial assets on Form 8938. The disparity identified by TIGTA was enormous.
For 2017 and 2018, taxpayers reported (on their IRS Form 8938) approximately $6.6 billion and $15.9 billion, respectively, while foreign financial institutions reported (on IRS Form 8966) approximately $106.8 billion and $173.0 billion.
From these figures, TIGTA concluded that the data indicated potential unreported or underreported foreign bank-account values of approximately $157 billion.
That conclusion deserves considerable skepticism. Among other questions: how many of those reported foreign assets belong to lawful permanent residents—“green card” holders—who actually reside overseas and may qualify as residents of a treaty country under an applicable U.S. income tax treaty?
That was precisely the type of residency issue presented in my case of Aroeste v. United States, Case No. 22-cv-00682-AJB-KSC (S.D. Cal. 2023).
Account holders and their advisors nevertheless have good reason to take FBAR exposure seriously. Federal courts have increasingly accepted a relatively low threshold for establishing a “willful” FBAR violation. The government generally needs to prove its civil FBAR case only by a preponderance of the evidence, and courts have repeatedly held that willfulness can include recklessness or willful blindness, rather than requiring proof that the taxpayer deliberately intended to violate the FBAR statute.
See, among others, United States v. Reyes (2d Cir. 2026); Bedrosian (3d Cir.); Horowitz (4th Cir.); Kelly (6th Cir.); Rum and Schwarzbaum (11th Cir.); and Norman and Kimble (Federal Circuit).
That is where the real concern lies, not simply in the disappearance of an IRS webpage.
The IRS Removed the Webpage—Not Its Internal Guidance in the IRM (the IRS’ “Bible”)
The IRS removed the public-facing “Delinquent FBAR Filing Procedures” webpage, but the same guidance remains in the Internal Revenue Manual (IRM) to still encourage late filed FBAR filings. The same language is found in the IRM, which is the most important since revenue agents and managers “are responsible for adhering to the content of this IRM”. See, IRM 4.26.16.1(i).
The IRM continues to provide that an FBAR penalty should not be imposed when:
the violation was due to reasonable cause; and
accurate delinquent or amended FBARs are filed to correct the prior violations.
The critical point is that filing a delinquent FBAR does not itself establish reasonable cause or eliminate a potential penalty, but notification of the government is required if you go down this path.
IRM 4.26.16.3.11 continues to describe the delinquent FBAR filing procedures. Among other things, it instructs taxpayers to file delinquent FBARs electronically, using the instructions applicable to the year being reported, and to provide the reason why the FBAR was filed late.
Most importantly, the IRM states that a penalty will not be asserted for an account “if it is determined” that:
the failure was not willful;
the failure was due to reasonable cause; and
the account was properly reported on the delinquent FBAR.
The words “if it is determined” are crucial. Who makes that determination? See my case of Jones v. United States, No. 19-CV-4950 (C.D. Cal. 2020), as a cautionary tale.
Ultimately, the IRS makes this determination which starts the government machinery running. Its not the account holder, the person with signature authority, or the taxpayer’s advisor; no matter how convinced they are of their reasonable cause and their facts.
The More Important Question (Implied Above): Should You File a Late FBAR at All?
This is the question that deserves considerably more attention.
Whether someone should file a delinquent FBAR depends entirely upon the person’s particular facts and circumstances. Filing late is not automatically the safest course.
One of the most important considerations is the six-year FBAR statute of limitations under 31 U.S.C. § 5321(b)(1). That limitation period is fundamentally different from certain Title 26 international information-reporting rules, where the assessment period can remain open under IRC § 6501(c)(8).
Accordingly, before filing a delinquent FBAR, an account holder should understand at least two competing questions:
What are the consequences of filing late?
What are the consequences of not filing at all?
Those questions cannot responsibly be answered without examining the particular years involved, when the six-year limitations period expires, the underlying income-tax filings, what the taxpayer knew, all of the surrounding facts, what advice was received, and whether the government might characterize the conduct as willful or reckless.
Bittner Changed the Economics of FBAR Enforcement
The Supreme Court’s decision in Bittner v. United States, 598 U.S. 85 (2023), significantly changed the strategic landscape.
The Court held that the non-willful FBAR penalty applies on a per-report, rather than per-account, basis. That substantially reduced the government’s potential penalties in all non-willful cases involving numerous foreign accounts.
As a practical matter, Bittner also changed the economics of FBAR enforcement. I had the privilege of working on the ACTEC amicus brief filed in Bittner – which was cited in both the majority opinion by Justice Gorsuch and the dissent by Justice Barrett – See Brief for American College of Trust and Estate Counsel as Amicus Curiae 5–7.
In my view, the IRS now has a greater incentive to focus its enforcement resources on cases in which it believes it can establish willfulness through reckless disregard or willful blindness, thereby potentially supporting the much larger willful FBAR penalty.
These Are the IRS’s Own Rules
It is also important to distinguish the statute from the IRS’s administrative procedures.
I sometimes refer to these as the IRS’s “Monopoly rules.” They are the government’s administrative rules for handling delinquent FBARs; they are not themselves statutory safe harbors enacted by Congress.
That distinction matters.
The IRM says a penalty will not be asserted “if it is determined” that reasonable cause exists and the other requirements are satisfied. But “reasonable cause” is not defined in the FBAR statute itself, Title 31.
Instead, courts and the government have borrowed concepts developed under Title 26, including the Supreme Court’s familiar “ordinary business care and prudence” standard. See United States v. Boyle, 469 U.S. 241 (1985); see also Moore v. United States, No. C13-2063RAJ (W.D. Wash. 2015), and United States v. Ott, No. 2:18-cv-12174 (E.D. Mich. 2019).
Filing Late Does Not Erase the Original Violation
This point is sometimes overlooked.
Once an FBAR filing deadline has passed without the required report being filed, subsequently filing the FBAR does not somehow erase the historical failure.
The water has already passed under the bridge.
A delinquent filing may become highly relevant to reasonable cause, mitigation, cooperation, and the government’s ultimate enforcement decision. But it does not make the original failure disappear.
Moore provides an important cautionary example. An even more dramatic example arose in Jones v. United States, No. 19-CV-4950 (C.D. Cal. 2020), a case I represented as we prepared for a jury trial during the COVID period.
Mrs. Jones, an elderly widow, and her late husband’s estate challenged approximately $3.4 million in willful FBAR penalties. She had affirmatively disclosed her late filings to the IRS through the streamlined process after filing the delinquent FBARs. The government nevertheless pursued a willfulness theory based substantially on willful blindness.
The government argued willful blindness and Mrs. Jones (90+ years of age), ironically, was legally blind by the time the case was set to go to trial.
That is one reason the facts surrounding preparation and signing of the income-tax return can become just as important as the FBAR itself.
The lesson is important: coming forward and filing late does not itself immunize an account holder from an FBAR penalty examination. It does not mean a revenue agent will come to the right result based upon the facts of your case. It can be a bit like the lottery.
“Reasonable Cause” May Not Mean What You Think
What does it take for the IRS to conclude that reasonable cause does not exist?
Sometimes, not much.
A simple “mistake” or “oversight” does not necessarily constitute reasonable cause. The government generally looks for evidence that the person exercised ordinary business care and prudence but nevertheless could not comply.
Death, serious illness, destruction of records, fire, or natural disaster can support reasonable cause under appropriate circumstances. But even those facts do not automatically establish it.
Likewise, ignorance of the FBAR requirement ordinarily does not automatically establish reasonable cause. Even reliance on professional tax advice may be insufficient—particularly where the government contends that the advisor lacked appropriate international-tax expertise or that the taxpayer failed to provide the advisor with the relevant information.
The disappearance of the IRS webpage titled “Delinquent FBAR Filing Procedures” should not itself drive a taxpayer’s decision.
The underlying IRS guidance remains in the Internal Revenue Manual.
The much more important question is whether filing a delinquent FBAR is actually the appropriate strategy for the particular individual and the particular years involved.
That requires understanding the six-year FBAR statute of limitations, the taxpayer’s underlying filing history, the reason the FBAR was not timely filed, what the taxpayer knew, what professional advice was received, the information appearing on Schedule B and other returns, and the possibility that the government could characterize the conduct as reckless or willful.
Once a delinquent FBAR is filed, the filing—and the taxpayer’s explanation for filing late—cannot simply be taken back.
So be thoughtful when someone recommends entering the “Delinquent FBAR Filing Procedures” for a low low fee of just US$**99.99.
Understand why you are filing, what you are saying to the government, what years remain open, and what consequences may follow.
Dive in with your eyes wide open – and make sure you can see the bottom before you jump.
IRS Removes Practice Unit from their Website – titled “Determining Tax Residency Status of Lawful Permanent Residents” – Post-Aroeste
The decision in Aroeste v. United States, continues to affect how U.S. tax treaty rules apply to green card holders. In Aroeste, the federal district court rejected important IRS-DOJ arguments concerning when a lawful permanent resident is not treated as a resident of the United States under an income tax treaty. I refer to the broader consequences of the case as the Aroeste Effect, which rears its head in proposed Treasury Regulations to be discussed for another day.
For years, the IRS Large Business and International Division (LB&I) published a Practice Unit titled Determining Tax Residency Status of Lawful Permanent Residents. Issued in 2013 and updated in 2014, it was used to help IRS personnel determine the U.S. tax residency of green card holders—the very subject litigated in Aroeste. That Practice Unit has now been removed from the IRS website.
The removal is notable because the IRS continues to publish other related international tax Practice Units. For example, its 2018 Practice Unit, remains available: Determining an Individual’s Residency for Treaty Purposes PDF This 2018 Practice Unit has not been updated to address Aroeste. Importantly, however, it does not repeat the government’s argument in Aroeste that a taxpayer can lose or waive treaty benefits by failing to timely “take” a treaty position. The district court rejected the government’s position on that issue.
The IRS has not publicly explained why it removed the Practice Unit specifically addressing lawful permanent residents. Nevertheless, its disappearance after Aroeste is significant. For green card holders living outside the United States, the practical issue is straightforward: holding a green card does not necessarily mean the individual must always be a “United States person” – i.e., a U.S. tax resident. An applicable tax treaty can change that result.
The intricacies of the law can be complex, depending upon the facts of each person. The IRS’s removal of its own Practice Unit on this subject is another noteworthy example of the Aroeste Effect.
Missed FBAR Filing? Penalties, Options, and What to Do Next (2026)
A missed FBAR filing can become a serious tax problem if the IRS views the violation as willful. After Reyes, reckless conduct may be enough for the government to argue willfulness. This guide explains how to evaluate your options, respond to the IRS, and protect your position from the start.
What is an FBAR?
The Foreign Bank Account Report (FBAR), officially known as FinCEN Form 114, is an annual reporting form used to report certain foreign financial accounts to the U.S. government. If you are a U.S. citizen or a green card holder and the combined value of your accounts at banks outside the United States exceeded $10,000 at any point during the year, the law generally requires you to tell the U.S. government about those accounts every year on this form. The FBAR goes to FinCEN, a bureau of the U. The FBAR is due April 15, with an automatic extension to October 15 that you do not have to request.S. Treasury Department, and the IRS is the agency that enforces it.
Who needs to file FBAR?
The filing requirement generally applies even if:
You are a United States citizen and live outside of the United States.
The accounts are in the country where you live.
The accounts earn no income.
You are a green card holder, even those who have not lived in the United States for years — unless your green card status has been formally terminated or a tax treaty position properly applies (this guide includes a legal analysis on this topic discussed below).
What are the penalties for not reporting FBAR?
It depends on whether your failure was “non-willful” or “willful.” Before diving into the details, this chart summarizes the civil and criminal FBAR penalties:
Type of violation
Civil penalty
Criminal penalty
Non-willful An honest mistake or genuine ignorance
Up to roughly $16,500 per unfiled form. Under Bittner v. United States, this is per form, not per account.
None
Willful
The greater of roughly $165,000 or half of the account balance, per account, per year.
Fines up to $250,000 and five years in prison per violation. Prosecution is extremely rare.
Willful, combined with other crimes
As above.
More than the amounts above.
Unpaid assessments
Interest, plus a mandatory 6% late-payment charge.
—
Civil and criminal FBAR penalties. Dollar figures are inflation-adjusted and change annually.
A warning: if any part of your situation could be called “willful,” be careful who you talk to first.
If there is any chance the government could paint your situation as deliberate or careless, the order of your conversations matters before anything else does. This is because only what you tell a lawyer is protected. Anything you tell an accountant can become the government’s evidence. See more in the section “Is there an accountant-client privilege in federal court?” below.
What is a non-willful FBAR violation?
A non-willful violation – an “honest mistake or genuine ignorance”— carries a civil penalty (31 U.S.C. § 5321) of up to roughly $16,500 (inflation-adjusted) per unfiled form. The law is complex about what the courts have said is non-willful. Please see the FBAR detailed technical report. The Supreme Court held in Bittner v. United States1 that it is per form, not per account — a taxpayer victory over the government’s per-account computation, urged in the friend-of-the-court brief filed by the American College of Trust and Estate Counsel (ACTEC) and co-authored by attorney Patrick W. Martin in his role as a Fellow of ACTEC.
What is a willful FBAR violation?
A willful violation is different in kind: the civil penalty is the greater of roughly $165,000 or half of the account balance, per account, per year, and truly willful cases can be prosecuted criminally (although extremely rare), with fines up to $250,000 and five years in prison per violation (more if combined with other crimes). Interest and a mandatory 6% late-payment charge apply to unpaid assessments. Because “willful” penalties can consume an entire account — and more — the fight in most cases is over that one word as was the case of Mrs. Jones.
Is my accountant protected by privilege?
No. Conversations with an accountant, bookkeeper, enrolled agent, tax-return preparer, or financial advisor are not protected in a case like this. Accountants have only a limited privilege under IRC § 7525, which does not apply in criminal matters. For decades, courts have allowed the government to demand those advisors’ files and put them on the witness stand.
On the other hand, conversations with a lawyer are protected by the attorney-client privilege: the government generally cannot force your lawyer to reveal them. If your case could become serious, talking to the wrong professional first may unintentionally create evidence the government can later use against you.
Can I still use the “I didn’t know” defense?
This depends on your specific facts. In January 2026, in United States v. Reyes2, a federal appeals court in New York joined nearly every other appeals court in holding that “willful” includes reckless conduct. Applying the Supreme Court’s standard in Safeco Insurance Co. v. Burr, the question is no longer just what you actually knew; it is what a reasonable person in your shoes should have known.
What counts as reckless disregard?
The government may argue you were reckless even if you sincerely believed you had no obligation, in situations such as these:
Your tax return asked about foreign accounts and you checked “No.”
Your preparer asked and you didn’t mention the accounts.
Your foreign bank held your mail, so nothing arrived in the U.S.
Margaret J. Jones v. United States: willful penalties after a voluntary disclosure
This is not a new government tactic that arrived with Reyes. Years earlier, in Margaret J. Jones v. United States3 — a case litigated by attorney Patrick W. Martin as principal lawyer — the IRS examiner pursued more than $1.5 million in willful penalties against Mrs. Jones (plus nearly $1.9 million against a related estate) on a “willfully blind” theory. The penalty was more than $3.4 million in total, even though the account holder had come forward voluntarily and IRS colleagues had recommended allowing an amended submission.
Whether your facts look “honestly ignorant” or “reckless” is a judgment call — one you should reach with a lawyer, in private, under privilege, not by narrating everything to an accountant, financial advisor, enrolled agent or tax return preparer, whose notes the government can later legally access and read.
Does the IRS have to give me a jury trial before assessing FBAR penalties?
In September 2025, United States v. Sagoo4 threw out more than $1 million in willful FBAR penalties because the IRS investigated the taxpayer, determined she was liable, and assessed the penalties itself— acting, in the court’s words, as “prosecutor, jury, and judge”—without a jury trial. The court relied on the Supreme Court’s 2024 decision in SEC v. Jarkesy, which held that the SEC could not impose civil penalties in-house without a jury.
If that ruling holds up on appeal, the government may have to persuade a jury before finalizing large willful penalties. That is potentially good news for taxpayers, but tax payers should still be cautious. Other courts have reached the opposite conclusion, so do not count on Sagoo protecting you. It is still important to understand what a jury trial actually means in practice.
What does a jury trial actually mean in practice?
One of the first willful FBAR penalty cases fully prepared to be tried to a federal jury was Margaret J. Jones v. United States, in which attorney Patrick W. Martin, the author, served as principal lawyer. The case was litigated to the eve of the scheduled jury trial, at which point the government conceded millions of dollars in FBAR penalties it had originally assessed.
But a jury trial is not necessarily the advantage many taxpayers imagine. If your case goes to a jury, everything you told your accountant, bookkeeper, and financial advisor can be admitted as evidence at trial. Only what you told your lawyer stays out — which is why trial-ready cases are built under privilege from the first conversation. Tax litigation through a trial can become very expensive.
Does FBAR apply to green card holders?
Almost certainly yes, and it complicates the situation. Holding a green card generally makes you a “U.S. person” for FBAR purposes, even if you live abroad full-time and you no longer travel to the United States.
However, that is not always the case. If you have formally abandoned your green card by filing Form I-407 (which carries its own exit-tax considerations), or if a tax treaty’s residency tie-breaker treats you as a resident of another country, different rules may apply. Whether a treaty position applies to you is a genuine legal question, as illustrated by Patrick W. Martin’s case, Aroeste v. United States.
I’m a green card holder. Can a tax treaty protect me from FBAR filing requirements?
Yes, in some circumstances. However, this issue is highly fact-specific, and the answer is not as simple as treating all green card holders the same as U.S. citizens. Many “expat tax” services use that shortcut, which can result in unnecessary filings, missed reporting obligations, or unexpected penalties.
This is an area where careful legal analysis matters. Patrick W. Martin litigated Aroeste v. United States5 , the leading case on this issue, and provides an in-depth analysis of its implications for green card holders here. For the broader set of issues facing green card holders abroad, see his series on the most important questions for lawful permanent residents.
Should I use a tax attorney or a CPA for an FBAR problem?
It depends on how your facts look:
If your facts are clean: you reported all your income, you simply never heard of the form, nothing looks like concealment, and you acted in good faith— an accountant can often handle a straightforward catch-up filing.
If there is any realistic possibility your facts could be portrayed as willful: a “No” on Schedule B, unreported income, accounts you never mentioned to your preparer, hold-mail service, large balances — see a licensed tax attorney before discussing details with any non-lawyer.
There are two reasons. First, only the attorney conversation is privileged.
Second, if accounting work is needed, your attorney can hire the accountant under what is called a Kovel arrangement (sometimes called a Kovel letter), which brings the accountant’s work inside the attorney’s privilege. Be wary if a lawyer tells you that you do not need a Kovel arrangement and he or she will prepare the tax returns and forms themselves to submit to the IRS. That protection only works going forward, as no lawyer can retroactively protect what you already told your CPA or bookkeeper, or financial advisor or enrolled agent, which is exactly why the order of conversations matters.
Which FBAR compliance procedure applies to me?
Three main paths exist today:
Path
When it applies
Delinquent FBAR Submission Procedures
If you reported all your income and only missed the forms, the Delinquent FBAR Submission Procedures let you file late FBARs with an explanation, typically with no penalty.
Streamlined Filing Compliance Procedures
If you also missed income but your conduct was non-willful, the Streamlined Filing Compliance Procedures let you file three years of returns and six years of FBARs with reduced or no penalties. You must certify on Form 14653, under penalty of perjury, that you were non-willful (see section “Why does my non-willfulness certification matter?” below).
IRS Voluntary Disclosure Practice
If your conduct may have been willful, the IRS Voluntary Disclosure Practice is designed for taxpayers who need to disclose that conduct and seek protection from criminal prosecution.
Why does my non-willfulness certification matter?
The Streamlined Filing Compliance Procedures are available only to taxpayers whose failure to report foreign financial assets or income was non-willful. The IRS describes these procedures as applying to taxpayers who “mistakenly failed to report foreign financial assets or pay taxes on those assets.”6 To use the program, you must certify under penalty of perjury that your conduct was non-willful. That certification is not just a filing requirement—it is a legal judgment about your knowledge, intent, and the facts surrounding your reporting failures. If the IRS later disagrees, the consequences can be significant.
What if the IRS disagrees with my non-willfulness certification?
If the IRS determines that your conduct was actually willful, it can challenge your eligibility for streamlined treatment and pursue willful FBAR penalties. This happened in Margaret J. Jones v. United States — litigated by attorney Patrick W. Martin as her principal lawyer.
After Mrs. Jones made a Streamlined disclosure, the IRS argued that she had been “willfully blind” and assessed more than $3.4 million in willful penalties against her and a related estate. The IRS took that position despite internal recommendations supporting an amended submission and a dispute over whether the estate could use Streamlined procedures in the first place.
The case was litigated to the eve of a federal jury trial before the government conceded millions of dollars of the assessed penalties—showing why these cases often require experienced legal advocacy, not just tax preparation. The IRS has also discussed modifying or ending the Streamlined program, so the options available today may not last forever.
Is doing nothing ever the right option?
This depends upon all of your facts and the applicable law, but sometimes your best option may be to do nothing! For example, a good faith failure to report gifts or inheritances from nonresidents must generally be reported on IRS Form 3520. However, the failure to do so (with good facts) might simply be an administrative problem that ultimately resolves itself with the running of the statute of limitations period against the IRS.
A late filing can create new problems
Compare that to what happened to Mr. Krzysztof Wrzesinski7 . Mr. Wrzesinski relied on an advisor who told him he did not need to report a gift from his Polish mother, who had won a Polish lottery. After a second advisor later recommended filing a late Form 3520, the IRS pursued penalties and the case continued until the eve of trial over the penalty amount.
What if the IRS has already contacted me?
That changes the stakes significantly. You may no longer qualify for the Streamlined program, and statements you make to the IRS or to non-attorney advisors (CPA, tax return preparer, enrolled agent, financial advisor, family member, etc.) may later be used against you. If you have potentially problematic facts, do not “explain things” to the IRS revenue agent or debrief your tax return preparer before speaking with a tax attorney.
What happens if I file a false or incomplete form?
Never file a false or incomplete form in the hope that it will make the problem go away. The opposite can happen. A return that omits foreign income, a perjured non-willfulness certification, or an FBAR that deliberately omits accounts can turn a civil penalty issue into potential criminal liability.
Why FBAR problems often require a tax attorney early
The law is moving in both directions at once:
Reyes made it easier for the government to call you willful.
Sagoo may eventually make it harder for the government to collect (although hiring a lawyer to defend you in a judicial proceeding can get expensive quickly).
The compliance programs that reduce or eliminate penalties that are currently available should be seriously considered depending upon your facts.
“I didn’t know” as a legal position can typically be harder to sustain.
You should consider coming forward before the government finds you, if it is in your best interest.
You should make that decision about how to come forward (or not) with a licensed attorney.
Treat the attorney-client privilege as what it is in these cases: not a formality, but the difference between analyzing your worst facts in private versus handing these facts and documents over to the other side (the government) in the event of an audit or further dispute.
Sources
Bittner v. United States, 598 U.S. 85 (2023). Amicus brief filed by the American College of Trust and Estate Counsel (ACTEC), co-authored by Patrick W. Martin as a Fellow of ACTEC. ↩︎
Jones v. United States (C.D. Cal. May 11, 2020). Willful penalties of $751,685 (2011) and $770,255 (2012) were assessed against Mrs. Jones, and $1,890,074 against a related estate. Patrick W. Martin served as principal lawyer. ↩︎
United States v. Sagoo (N.D. Tex. Sept. 19, 2025). The IRS had assessed $1,020,922.50 in willful FBAR penalties. The court relied on SEC v. Jarkesy, 603 U.S. 109 (2024). ↩︎
Part II of Part II: The Gold Card – The U.S. Tax Costs – “It’s like the green card, but better and more sophisticated.”
See Part I for the background discussion, which was published more than a year ago.
This article focuses on the tax consequences of the “Trump Gold Card” program and, in particular, the implications if participation ultimately leads to U.S. citizenship (“USC”).
The final version of the Gold Card program requires a $1 million contribution to the federal government, rather than the $5 million amount initially discussed in April 2025. See the government website, The Trump Gold Card is Here.
It is also important to note that President Trump established the Gold Card program through Executive Order 14351 in September 2025. Congress did not enact the program through legislation.
The Cost of a Trump Gold Card
For a $15,000 Department of Homeland Security processing fee and, following successful background review, a $1 million contribution to the federal government, an applicant may obtain U.S. permanent residence through the Gold Card program.
Why Would an Ultra-High-Net-Worth Individual Voluntarily Enter the U.S. Tax Net?
A fundamental question arises: Why would an ultra-high-net-worth (“UHNW”) individual contribute $1 million to obtain U.S. residence and potentially U.S. citizenship, thereby becoming subject to one of the world’s most expansive tax systems?
For many individuals, acquiring U.S. citizenship or lawful permanent resident (“LPR”) status can result in exposure to:
U.S. income taxation on worldwide income;
U.S. gift taxation on worldwide transfers of property; and
U.S. estate taxation on worldwide assets at rates that currently reach 40%.
U.S. Estate and Gift Taxation of Worldwide Assets
The United States generally imposes estate and gift taxes on the worldwide assets of U.S. citizens. In addition, lawful permanent residents who are domiciled in the United States may become subject to the same worldwide transfer tax regime.
Unlike many countries, the United States generally does not permit its citizens to escape worldwide taxation simply by relocating abroad. Most U.S. income tax treaties and estate and gift tax treaties contain a “savings clause” that preserves the right of the United States to tax its citizens notwithstanding treaty provisions.[1]
U.S. Estate and Gift Taxation of Worldwide Assets
As a result, the worldwide assets of a U.S. citizen may be included in the U.S. transfer tax system under IRC §§ 2001 and 2031 (estate tax) and IRC §§ 2501 and 2511 (gift tax).
Consider a U.S. citizen who owns:
a residence in Norway;
shares of a Mexican corporation;
a bank account in Singapore;
an interest in a Liechtenstein foundation (Stiftung);
a portfolio of securities held through a London financial institution; and
an apartment in Dubai.
Subject to applicable valuation and ownership rules, each of these assets generally forms part of the individual’s worldwide taxable estate for U.S. estate tax purposes.
By contrast, a non-U.S. citizen who is not domiciled in the United States generally would not be subject to U.S. estate tax on any of these assets, unless they include U.S.-situs property such as stock issued by U.S. corporations.
The difference can be dramatic: no U.S. estate tax exposure versus potential exposure to a 40% U.S. estate tax on worldwide assets.
U.S. Income Taxation of Worldwide Income
The contrast is equally significant in the income tax context.
A nonresident generally is subject to U.S. income taxation only on limited categories of U.S.-source income and income effectively connected with a U.S. trade or business.
A U.S. citizen, however, remains subject to U.S. federal income taxation on worldwide income regardless of where the individual resides.
Consequently, a foreign entrepreneur, investor, or family office principal who acquires U.S. citizenship will find that income earned from businesses, investments, trusts, partnerships, and financial accounts throughout the world generally becomes reportable to the Internal Revenue Service and subject o U.S. income taxation.
That result raises an obvious question: if the program is available, why have so few ultra-high-net-worth individuals pursued it successfully?
The most obvious explanation is that the long-term U.S. tax consequences may outweigh the perceived immigration benefits for many globally mobile individuals.
Comparison to the EB-5 Program
Different applicants may have different motivations.
The traditional EB-5 immigrant investor program generally requires a qualifying investment that, if successful, may ultimately be recovered. The program also requires satisfaction of statutory requirements, including job creation. Approximately 200,000+/- individuals have obtained a green card through the EB-5 program. There are important unintended tax consequences that can befall individuals here: see, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware!International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9).
EB-5 Visa Applicants by Country
By contrast, the Gold Card program requires a direct contribution to the federal government.
In either case, the successful applicant receives lawful permanent resident status. However, if the Gold Card ultimately serves as a pathway to naturalized U.S. citizenship, the applicant may become subject to the unique worldwide taxation regime applicable to U.S. citizens.
The Expatriation Problem
If Gold Card holders ultimately naturalize as U.S. citizens, future departure from the U.S. tax system will necessarily become significantly more complicated.
Individuals who later seek to relinquish U.S. citizenship will necessarily face the expatriation rules of IRC § 877A and be tainted with “covered expatriate” status.
As discussed in earlier posts, covered expatriate status can have substantial long-term tax consequences for both the expatriating individual and future recipients of gifts and inheritances.
Legal Questions Surrounding the Program
The Gold Card program also raises constitutional and statutory questions.
Unlike the EB-5 program, which was enacted by Congress, the Gold Card program was created through executive action. Congress did not amend Title 8 of the United States Code to establish a new immigrant category.
Whether the Executive Branch possesses sufficient statutory authority to create such a program remains an open legal question (I am doubtful it will be sustained – if challenged) and will likely be the subject of continued litigation and judicial review.
The outcome of pending litigation involving other immigration-related executive actions may provide useful guidance regarding the scope of presidential authority in this area. We await the outcome of the latest case litigated through the courts. See, Supreme Court appears likely to side against Trump on birthright citizenship which was also issued by an executive order.
Who Truly Benefits?
Who is the ideal candidate for a Trump Gold Card? Only one person thus far has one.
For almost all HNW individuals, the immigration benefits, travel flexibility, business opportunities, and potential pathway to U.S. citizenship would rarely justify the cost. Someone with assets below US$20M might find it attractive.
For almost all others—particularly those with substantial foreign businesses, investment portfolios, trusts, and family wealth located outside the United States—the long-term consequences of worldwide U.S. income, estate, and gift taxation will almost always substantially outweigh the advantages.
As a result, any prospective applicant for a Trump Gold Card should carefully evaluate not only the immigration benefits of the program (+ the uncertainty in the law), but particularly the tax consequences that will follow for decades thereafter.
Why Are Foreign Banks Closing Accounts for Americans Abroad?
Is it hype, or is it real? Many U.S. citizens and lawful permanent residents (green-card holders) living overseas have heard that foreign banks are closing their accounts. Here is what actually shows up in practice, and why so many people are moving their money home.
Are foreign banks really closing the accounts of Americans living overseas?
It is hard to know with certainty how accurate these claims are. If it has happened to you, of course you will know it. In practice, account closings have turned up in places such as Hong Kong, London, Geneva, and Zurich. But they do not appear to be a widespread practice, at least not anecdotally.
What have news reports said about banks cutting off American expats?
Several published reports have raised the issue, including:
The Wall Street Journal, “Expats Left Frustrated as Banks Cut Services Abroad” (11 Sept 2014).
The Wall Street Journal opinion piece by Colleen Graffy, “How to Lose Friends, Citizens and Influence.”
Time Magazine, “Swiss Banks Tell American Expats to Empty Their Accounts.”
The Huffington Post (Aug 2014), “Expatriate Tax Sense or Broad-Brush Overreach: The U.S. Foreign Account Tax Compliance Act (FATCA).”
The New York Times (April 2013), “Overseas Finances Can Trip Up Americans Abroad.”
The Association of Americans Resident Overseas, on Americans abroad being denied access to banking and investment opportunities.
American Citizens Abroad, which compiles various news accounts of accounts being closed.
Does the size of the account change how a foreign bank responds?
It appears to. For individuals with large investment accounts, for example greater than US$1 million, banks seem to accommodate them, or at least require them to move their assets to a U.S. affiliate or branch. Those with smaller accounts, for example less than US$100,000, appear to see a broader brush stroke of closures.
If foreign banks aren’t the main driver, who is closing these accounts?
Much of it is the individual’s own decision, not the bank’s. What has been widespread in practice is a plan by individuals to close foreign financial accounts and relocate the assets to a U.S. financial institution. This includes U.S. citizens and lawful permanent residents (green-card holders) living outside the U.S. The move is the individual’s choice, not the financial institution’s.
Why are U.S. citizens and green-card holders abroad choosing to close their foreign accounts?
The reason is generally not FATCA (the Foreign Account Tax Compliance Act) itself, but a desire to reduce the compliance costs of filing and reporting on foreign accounts. FATCA seeks to co-opt foreign banks as long-arm enforcement of U.S. tax law. Even so, the driver people cite is cost, not the statute. Multiple tiers of reporting of foreign assets is now required. It can cost a small fortune to retain a good international tax adviser who is aware of these reporting requirements.
What reporting makes holding foreign accounts so expensive?
Two main layers apply to U.S. citizens and lawful permanent residents living outside the U.S.: the FBAR (the Foreign Bank Account Report) and IRS Form 8938 (Specified Foreign Financial Assets). For those with significant assets and numerous accounts, the professional fees and costs of reporting these accounts accurately can become exorbitant. That is especially true when the risk of potentially devastating civil penalties is weighed into the mix.
What penalties are people worried about?
The IRS now regularly threatens large, multiple-year 50% willfulness penalties for those who did not file an FBAR. This risk is more than just perceived. The Zwerner FBAR case is one example, and it has been described as probably a Pyrrhic victory for the government for U.S. citizens and lawful permanent residents living outside the U.S. The combination of cost, compliance burden, and penalty risk is what drives many people to act.
Is it actually illegal for a U.S. person to hold a foreign bank account?
No. There is no legal restriction for a U.S. citizen to hold foreign accounts. A U.S. citizen or lawful permanent resident residing outside the U.S. will generally find it easier, from a lifestyle and personal financial management perspective, to have an account in their home country. The irony is that the practical effect pushes in the opposite direction.
Where are these assets ending up?
The practical effect, anecdotally, is that U.S. financial institutions are receiving these assets and investments. As individuals close foreign accounts to cut compliance costs and penalty risk, the money flows back into the U.S. rather than staying in their home country abroad.
The FBAR (the Foreign Bank Account Report) comes from a different law than the federal income tax. The income tax sits in Title 26 of the U.S. Code. The FBAR comes from the Bank Secrecy Act, which is Title 31. These two laws are very different, with very different obligations and rights. One of the important differences is the time frame in which the government can assess penalties for not complying.
Who has to file an FBAR?
By its expansive terms, which some would call extraterritorial, the FBAR law applies to U.S. citizens residing outside the U.S. It also applies to most LPRs (lawful permanent residents, or green card holders) residing outside the U.S. Many of these people are unaware the rules reach them.
What is a statute of limitations for these penalties?
A statute of limitations is the time frame in which the government has to assess penalties for not complying with the law. For foreign accounts, these time periods are not the same under Title 31 (the Bank Secrecy Act) as they are under Title 26 (the income tax law). The gap between the two is what makes this area confusing.
Is there a time limit for the IRS to assess income tax if a return was never filed?
No. When a U.S. citizen or LPR residing overseas fails to file an income tax return, the time period for the IRS to make tax assessments never lapses. There is effectively no statute of limitations against the IRS in that situation. The clock to assess does not start until a return is filed.
How long does the government have to assess civil FBAR penalties?
Title 31, the Bank Secrecy Act, is different. It does have a time period that runs against the U.S. federal government, even if the FBAR was never filed. For civil assessments of penalties, that time period is 6 years.
Can someone be criminally liable for not filing an FBAR?
Yes. A U.S. citizen or LPR living overseas could become criminally liable for willfully not filing the FBAR form. Criminal liability carries different legal consequences than a civil penalty. The key word is willfully, which separates a criminal matter from a civil one.
How is the FBAR filed now?
All FBARs must now be filed electronically. The form is not filed with the IRS. It is filed with FinCEN (the Financial Crimes Enforcement Network), on Form 114, Report of Foreign Bank and Financial Accounts, through the BSA E-Filing System website. The electronic Form 114 supersedes TD F 90-22.1, the paper FBAR form used in prior years.
Can the U.S. collect FBAR penalties in the filer’s home country?
Not always. The laws of many countries outside the U.S. often conclude that enforcing these FBAR penalties against a U.S. citizen, inside that person’s home country, violates the laws of that country. Canada is one example. Calgary based tax attorney Roy Berg has written on the question of whether the IRS can collect FBAR penalties under the Canada-US Treaty.
Is there a statute of limitations for criminal FBAR charges?
Yes, there are also statutes of limitations for criminal charges the government brings for FBAR violations. The law gets much more complex here, especially when the taxpayer is residing outside the U.S. In that situation, the time period can be tolled or suspended in favor of the government, which extends the window to bring charges. Jack Townsend has written on the statutes of limitations for FBAR noncompliance related to tax noncompliance.
What do “willful” and “non-willful” mean for US citizens and green-card holders living abroad who have not filed?
“Willful” and “non-willful” describe how a failure to file is characterized. For any US citizen (USC) or lawful permanent resident (LPR, a green-card holder) living outside the US who has not been filing US income tax returns or FBARs (the Foreign Bank Account Report), the willfulness question is one of the most important to understand. The IRS “streamlined” procedure requires a taxpayer to certify that the conduct was non-willful. The distinction shapes the options a person has for correcting past filings.
Why does the willful or non-willful question matter for a US citizen or green-card holder overseas?
The willful or non-willful question matters because it shapes what steps a US citizen or green-card holder living abroad needs to take about filing US income tax returns. The answer affects how a person who has not been filing may approach cleaning up past returns and FBAR filings.
Can a green-card holder living in a tax-treaty country clean up past US tax filings?
A green-card holder who lives predominantly in a country that has a US income tax treaty may be in the best position to clean up past US tax filings and return positions. The US has 68 income tax treaties. Under the “tie-breaker provisions” of such a treaty, typically Article 4, the person’s facts may allow them to file as a non-resident, and those filings may apply to several prior years.
When is a green-card holder no longer treated as a lawful permanent resident for US tax purposes?
A green-card holder is no longer treated as a lawful permanent resident for US federal tax purposes under IRC Section 7701(b)(6) when three tests are met:
the individual is treated as a resident of a foreign country under the provisions of a tax treaty;
the individual does not waive the benefits of the treaty; and
the individual notifies the Secretary of the commencement of such treatment.
When a green-card holder notifies the IRS that he or she is not a US resident under an applicable income tax treaty and files the treaty position accordingly, the issue of “expatriation” becomes front and center.
Can a green card be given up for tax purposes just by moving outside the US?
In some cases, yes. Since the 2008 tax law changes, lawful permanent resident status can be abandoned for tax purposes by merely leaving and moving outside the US.
Does giving up long-term green-card status trigger the US exit tax?
Giving up green-card status can trigger the US “exit tax” for a green-card holder treated as a “long-term resident.” A green-card holder who has held that status for 8 years or more is generally treated as a long-term resident and may be subject to the exit tax of IRC Sections 877 and 877A. A separate tax may also apply to future US persons who receive gifts or inheritances from such a former green-card holder under Section 2801.
What does the IRS streamlined procedure require taxpayers to certify?
The IRS “streamlined” procedure, announced on June 18, 2014, has specific requirements that obligate the taxpayer to certify “non-willful” behavior. That certification is made under penalty of perjury. Where a green-card holder’s past failure to file US income tax returns was not non-willful, difficult legal questions arise about the consequences.
Understanding Your FBAR Obligations: A Guide for U.S. Citizens and Residents Abroad
If you are a U.S. citizen or a Green Card holder living overseas, you may have heard of the “FBAR.” While it sounds like a complex tax term, it is actually a financial reporting requirement that follows you no matter where you live in the world.
Here is a breakdown of what you need to know to stay compliant, explained in plain English but with a focus on the legal details.
The FBAR stands for the Report of Foreign Bank and Financial Accounts. Its official name is FinCEN Form 114.
Legally, this is not an income tax requirement. It is a mandatory report required under Title 31, Section 5314 of the U.S. Code. Because it falls under “Money and Finance” laws rather than the Internal Revenue Code, you do not file it with the IRS. Instead, you file it with FinCEN (the Financial Crimes Enforcement Network), a separate branch of the Treasury Department.
Who has to file?
The requirement applies to all U.S. Citizens (USCs) and Lawful Permanent Residents (LPRs), regardless of their physical location.
Global Reach: If you are a U.S. citizen living in France, you are required to report your French bank accounts, as well as any other accounts you might hold in places like London or Geneva.
Green Card Holders: Similarly, a Green Card holder living in Sao Paulo, Brazil, must report their Brazilian accounts and any accounts held in other countries, such as Uruguay.
Defining “Resident”: Interestingly, the law for FBARs uses the tax code’s definition (Internal Revenue Code Section 7701(b)) to determine who counts as a “resident,” even though the FBAR itself is not a tax form.
Note: While many resources mention a $10,000 threshold for filing, this specific dollar amount is not mentioned in the legal excerpts provided here; you should verify current filing thresholds independently.
What accounts are covered?
The law is broad and covers bank and financial accounts located outside of the United States. This includes accounts in your country of residence and any other foreign country. Currently, all FBARs must be submitted using the electronic Form 114, which replaced the old paper form known as TD F 90-22.1.
Is the FBAR the same as Form 8938?
No, though they are often confused because they involve duplicate reporting.
FBAR (Form 114): A financial report filed with FinCEN under Title 31.
Form 8938: A tax information return filed directly with your IRS tax return under Title 26.
A major legal distinction lies in the statute of limitations. The FBAR has a time limit after which the government can no longer assess penalties, even if you never filed the form. In contrast, if you fail to file Form 8938, there is no time limit for the IRS to come back and assess income taxes and penalties for that year.
The reality of FBAR penalties
The penalties for failing to file an FBAR are often discussed as being severe, but the law provides some unique protections.
Penalties are Elective: The law states the Secretary of the Treasury “may” (not “shall”) impose a penalty. This means the government has the discretion to decide whether or not to penalize a violation; it is not mandatory.
Limited Collection Powers: Unlike a standard tax debt, the government cannot simply place a tax lien or levy on your property to collect an FBAR penalty. Instead, the government typically must sue you in a judicial court action to enforce the penalty.
Expiration Dates: Because there is a statute of limitations, the government’s window to act is limited. For example, if a U.S. citizen missed a filing for the year 2006, the time for the government to assess a penalty has already lapsed.
How to file
Gone are the days of mailing paper forms. All FBARs must now be filed electronically through the BSA E-Filing System website.
Staying compliant is obligatory, but understanding these nuances can help you navigate the process with more confidence. If you have accounts abroad, ensuring your electronic Form 114 is submitted correctly is the best way to avoid the complications of a potential government investigation.
This post provides general information only and is not legal advice. Consult an experienced attorney for guidance specific to your situation.
Many individuals have no idea that, under the legal principles confirmed in the federal district court case I litigated — Aroeste v United States, 22-cv-00682-AJB-KSC (20 Nov. 2023) – they may already be treated as “covered expatriates” as a matter of law.
Along Comes Section 2801 – and 2025 Final Regulations – The “Forever Taint” to Family and Friends (Paying the Taxman)
Aroeste – Landmark Decision Confirms the Law – Tax Treaty Law Applies – Taxpayers Do Not Waive Benefits per Gov’t
These writings all addressed the same underlying legal and policy expectations that courts would eventually be required to confront — issues now directly addressed in Aroeste. The Aroestedecision is also consistent with positions I successfully advanced in three separate U.S. Tax Court cases involving green card holders, none of which resulted in published opinions because the government ultimately conceded to my arguments and my clients prevailed prior to trial.
This case law has great impact on green card holders who are living principally outside of the U.S. There are 3.88 million individuals who are living outside the U.S. – per the 2024 report by the U.S. federal government. Many of them live in a treaty country. Many of these individuals might be considering their immigration law consequences (particularly after the latest announcement from the USCIS – impact these immigration consequences: U.S. Citizenship and Immigration Services Will Grant ‘Adjustment of Status’ Only in Extraordinary Circumstances (May 2026) Few have considered the tax law implications.
Most important Questions for “Green Card” Holders (“lawful permanent residents”): Part I of VI
Those individuals who have green cards and live in and outside of the United States, should understand the tax and legal implications to them.
There are millions of individuals in this category. i.e., those who have “emigrated” with an “e” from the United States. There are 3.88 million of these green card holders, as of 2024 according to the U.S. federal government’s latest report. The statistics are striking – that so many individuals reside outside the U.S.
These nearly 4 million individuals who do not reside principally in the U.S. are similar to the fact pattern of Mr. Aroeste residing in Mexico City. See the case where yours truly, Patrick W. Martin, was lead counsel in that landmark case – and the analysis of the District Court in Aroeste v. United States. The government lost.
Today’s post is a series of simple and key questions for those with green cards, to help them better hone in on the legal issues and U.S. tax risks that may be applicable to them:
Am I still a U.S. taxpayer?
What does it mean to be a U.S. taxpayer, when there are technical tax terms such as “United States person” and an individual who is a “lawful permanent resident” (not defined in the immigration law)?
I have a green card but I’ve lived outside the U.S. for years — do I still have to file U.S. tax returns?
The date on my physical green card has expired – does that mean I am no longer a a “lawful permanent resident” for tax purposes?
Does it matter whether my green card is expired, taken back at the airport, or just sitting in a drawer overseas?
Is there a difference between “giving up” my green card and just letting it lapse?
Aroeste v. United States — what does it mean for me? –
Why are all of the above questions so important to me – since I previously obtained a “green card”?
Subsequent posts will address additional key questions that can have a significant legal consequence to individuals who had or have a green card and spend substantial time outside of the United States. For a preview, look at Oops.. .Did I Expatriate and Never Know It – International Tax Journal 2014
foreign assets belong to lawful permanent residents—“green card” holders—who actually reside overseas and may qualify as residents of a treaty country under an applicable U.S. income tax treaty?
Who makes that determination? See my case of Jones v. United States, No. 19-CV-4950 (C.D. Cal. 2020), as a cautionary tale.
Many individuals have no idea that, under the legal principles confirmed in the federal district court case I litigated — 
