Oh boy, does the first paragraph ever press one of my hot button issues. The US Treasury FBAR (foreign bank account reporting) rules represent very bad law. The rule requires that all foreign accounts be disclosed. The penalty for non-compliance is $100,000 per year or 20% of the amount of undisclosed funds, whichever is greater. It was intended to catch people who have large off-shore tax shelters. That's a good idea in principle, but they severely botched the implementation of this law.

The threshold for reporting is $10K. This means that if someone is not aware of the requirement as has $11K overseas, they can be hit with a $100,000 fine. The penalty is grossly inappropriate. Worse, the definition of "account" is so vague that it is very easy to accidentally be in non-compliance.

I inadvertently ran into this problem myself and now I need to find a tax lawyer to help me, even though the cost of the lawyer will probably be at least half the almost-nominal value of the assets involved.

PS: Can anyone recommend a good tax lawyer experienced in handling FBAR issues?