1. Taxpayers who meet all four of the following conditions: (a) did not open or cause the account to be opened (unless the bank required that a new account be opened, rather than allowing a change in ownership of an existing account, upon the death of the owner of the account); (b) have exercised minimal, infrequent contact with the account, for example, to request the account balance, or update accountholder information such as a change in address, contact person, or email address; (c) have, except for a withdrawal closing the account and transferring the funds to an account in the United States not withdrawn more than $1,000 from the account in any year covered by the voluntary disclosure; and (d) can establish that all applicable U.S. taxes have been paid on funds deposited to the account (only account earnings have escaped U.S. taxation). For funds deposited before January 1, 1991, if no information is available to establish whether such funds were appropriately taxed, it will be presumed that they were.I omit the examples, but readers can review them here:
2. Taxpayers who are foreign residents and who were unaware they were U.S. citizens.
The purpose of this blog entry is to invite readers' comments regarding this 5% penalty. It seems to be narrowly drawn and will likely be narrowly interpreted. I think readers might be interested if any anyone has experience regarding this reduced penalty that might not be evident from a straightforward reading of the text.