Non-compliance has serious penalties, but the good news is that for late and non-filer expats the IRS has a new procedure for low-risk taxpayers to catch up - without penalties - if they now voluntary file returns for the last 3 years and FBARs for the last 6 years.
IRS Announces Efforts to Help U.S. Citizens Overseas Including Dual Citizens and Those with Foreign Retirement Plan (link opens in new window)
Below are the most recently updated (January 2014) IRS posts regarding Voluntary disclosure
http://www.irs.gov/Individuals/International-Taxpayers/FAQReStreamlinedFilingComplianceProceduresNRNFTPs
Read more for details of the 2012 Offshore Voluntary Disclosure Program.
If you are considering whether or not to start filing or to catch up with your filing, read about Why Holders of Foreign Bank Accounts Need to Worry About IRS’s Voluntary Disclosure Data-Mining Program.
Forbes Magazine wonders What To Say When (Not If) Your Offshore Bank Asks, 'Are You Compliant with IRS?'
Here is a recent Blogpost from a respected Crossborder Tax lawyer assessing current options for coming into compliance http://blogs.angloinfo.com/us-tax/2014/03/10/the-tax-non-compliant-american-abroad-what-are-your-choices/
Where do I start?
The IRS provides an overview of options for taxpayers trying to comply with filing, including nonfiled FBARs, low-risk filers and filing without owing taxes.
As always, please consult a tax professional for advice concerning your personal situation. (Be sure to understand the difference between consulting a tax lawyer and a tax preparer when making decisions about back filing using IRS compliance procedures etc !!)
Check out the FAWCO compiled list of U.S. Expat Tax Advisors and Preparers when you need professional help.