On December 7, 2011, the IRS released a Fact Sheet (which can be found here) summarizing the filing requirements for dual citizens of the United States and a foreign country, including federal income tax return and Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”). The Fact Sheet also discusses the various penalties imposed on those who fail to meet such filing requirements. However, the IRS provides a general overview for dual citizens, specifying that penalties will not be imposed on those that have failed to meet the reporting requirements in all circumstances. In certain circumstances, a dual citizen may be able to avoid the imposition of the failure to pay and failure to file penalties. Most importantly, the penalty for failure to file the FBAR may not be imposed if the IRS determines that the failure to file the FBAR was due to reasonable cause.

Although throughout the Fact Sheet, the IRS uses the term “dual citizen,” this is not 100% accurate. These requirements apply to any foreign person who is a citizen of a foreign country and is either a resident or citizen of the United States. A foreign individual will be deemed a United States citizen resident by meeting the number of days test or obtaining a green card. For purposes of this Practice Update and consistency with the Fact Sheet, we have used the term “dual citizen” throughout.