Skip to Main Content

Worldwide Tax Daily Quotes Mark Matthews on Gap Between FBAR Filing and Number of U.S. Citizens Living Abroad

February 29, 2016, Worldwide Tax Daily

Worldwide Tax Daily quoted Mark E. Matthews on the gap between the number of  U.S. citizens living abroad and the number of FBAR filing. For the complete article, please visit Worldwide Tax Daily's website (subscription required).  

Excerpt taken from the article "News Analysis: Minding the Gap in FBAR Filings" by Amanda Athanasiou.

"We know there are a lot of U.S. citizens abroad who are still out of compliance," Mark E. Matthews of Caplin & Drysdale Chtd. said. But the persistence of the gap has become increasingly perplexing given the IRS messaging regarding the end of the OVDP and information exchange under FATCA. FATCA's implementation is expected by many to narrow the gap, particularly given that the identity of many countries providing financial information is obscured.

. . .

Current Shortfall

. . .

"If FATCA is really working the way the IRS thinks it's going to work, why wouldn't there be people streaming in right now?" Matthews asked.\

. . .

"I believe the IRS approaches their offshore programs from an exaggerated belief of how many people are aware of them," Matthews agreed. And the problem isn't confined to those living abroad. There are a lot of first-generation citizens resident in the U.S. who don't understand the significance of foreign bank accounts because they grew up in territorial tax systems, Matthews said.

. .  .

Even among those who seek help, reporting accurately can be difficult. "First of all, what's 'foreign' when you're living in Brazil?" Matthews asked, referring to foreign residents' tendency to erroneously check "no" on question 7a of Form 1040's Schedule B, which asks about signature authority over a financial account located in a foreign country.

. . .

Matthews said that even today, six years into the offshore voluntary program, he gets calls from people in India, Brazil, and Singapore whose first hint about their U.S. tax responsibilities has just come from a local bank.

But while some U.S. citizens living abroad are being notified of their obligations from banks in countries with intergovernmental agreements, many are not, according to practitioners. "I think a lot of these U.S. citizens living abroad are dual citizens, who have opened their accounts under other citizenships with the result that the banks don't know to come to them with FATCA forms," Matthews said.

The Beginning of the End of the OVDP?

The IRS is starting to ramp up warnings about the end of the OVDP, Matthews said, citing Horton's comments at the Florida International Tax Conference and recent comments from other IRS officials. (Prior coverage 2016 WTD 7-1: News Stories.) "I think they think FATCA is going to solve the problem of unreported bank accounts" and that they won't need the OVDP in the future, Matthews said, adding that he thought this was an overly optimistic assessment of FATCA.

"It's way too early to declare FATCA a success," he said. Even if FATCA is a success in leading Western cultures with sophisticated financial systems that are also signing on to the common reporting standard, it's going to be a very long time before certain jurisdictions have the sophistication and tools to make FATCA work, he said.


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
©2021 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)