The FBAR limit is pretty low, around $10k isn't it? Once over that limit, are you really saying you could skip filing it on the basis of not having much money? The FACTA limit is much higher, most people wouldn't need to do that one.
As an American living abroad, it's kind of annoying. Filing the FBAR only takes a couple minutes though. You basically enter basic account info (bank, country, etc) and the max balance that it had during the year. It's like half a page. If you are over the $50k threshold and need to file an 8938, you probably have income abroad as well and are already having to pay a tax attorney/accountant to handle your taxes for you. Again, annoying but workable. Honestly, the simple fact that as a US citizen, I always have to file taxes in the US no matter where I live or get my income, is the bigger pain. FBAR/FATCA stuff is like 5% of the total bureaucratic BS that expats have to deal with. The more annoying part of FATCA is that because the banks also have to report back to the IRS, many non-US banks just refuse to allow US citizens to open accounts. That has more of an impact because it limits where you can bank and will affect things like buying property.
Things get more complex when you own a non-US ETF or mutual fund. Now you own a passive income trust that’s treated differently, with its own reporting requirements.
It can also be a headache to take advantage of your country’s non-retirement tax-advantaged savings programs (e.g.: Canada’s TFSA)
Or if you’re a director of a corporation, like being a board member of the building you live in.
It’s also headaches for a condominium if a US citizen becomes a board member, which they usually can’t stop because they were voted in. If their old bank didn’t want to deal with US persons, now they have to hang everything over to someone that does.
In reality, however, enforcement is lax - the IRS is getting decimated thanks to Trump and co. and so going after the small fry is not cost effective. High profile cases, e.g. Boris Johnson who has American citizenship, are just as much for PR purposes as enforcing the law. The IRS went after him because he was selling his house, something like that, and so it was profitable to get him for avoiding US tax law.
The FBAR is not under the IRS for the enforcement though, it's FinCEN.
The IRS makes overseas compliance for ordinary and accidental (just happening to be born on US soil, but otherwise no connection) American citizens very difficult and opaque, and the penalties are extraordinarily disproportionate when most of the time they usually owe absolutely nothing to US tax authorities other than paperwork.
It also makes access to financial products for American citizens and ex-citizens abroad difficult because local banks don't want to risk dealing with the millions on non-compliant citizens because they also face very high penalties for providing services to non-compliant citizens.
Essentially no other country taxes on the basis of citizenship instead of residency, and they are making a pig's ear of it.
He renounced his American citizenship, also mentioned by another commenter, over the matter you described i.e. US Tax ($50k+) for sale of his home in the UK.
https://www.theguardian.com/politics/2017/feb/08/boris-johns...