How will the IRS determine willful or non–willful conduct in a US taxpayer?  This is the essence of the question that the IRS has yet to answer. If you can claim non-willful status, the reward is significant: a 5% penalty and no criminal prosecution. Many U.S. taxpayers have simply assumed the risk and filed under the Streamlined Procedures hoping the IRS will look the other way. This is a dangerous strategy. The 2 questions you should ask yourself are:

1. Why would the U.S. Legislature take years to pass FATCA, and the U.S. Justice Department invest years and millions of dollars to pursue Swiss and other offshore institutions to obtain your information just to simply ignore it and give U.S. taxpayers amnesty?
2. What is your tolerance for risk? You are risking not only substantial financial assets, but exposure to criminal charges and the loss of your personal freedom.

Practically speaking, if you made a simple math mistake on one form in one year, or left off one institution with a minimal account balance one time, you are probably safe to consider non-willful status and apply through the Streamlined Procedures.

If you failed to report multiple accounts in different institutions, or failed to disclose assets and income over more than one year, you should give serious consideration to the risks of attempting to claim non-willful status and that you weren’t in fact attempting to hide assets and avoid the payment of U.S. taxes.