It does seem like it could be onerous to US-citizen expats if it means they're going to have trouble opening normal bank accounts in the countries where they live, work, do business, and pay taxes. If I were they, I wouldn't want to feel I had to choose between renouncing my citizenship and opening myself to a charge of lying to the IRS (which seems to be what Floction is recommending) just to open a European bank account. Much less getting insurance; I don't even understand why tax reporting would apply to that.
>>If you are or ever have been a US resident or work or have worked for an American company under certain circumstances or have certain types of US investments or property you may be a US person for tax purposes.
If that were true, I would understand your concern, since it would seem unreasonable of the IRS to continue demanding data even if the person is not currently resident in the US or earning income from the US. And having to prove that you're not in the category does sound a lot like guilty until proven innocent, though a lot of post-9/11 law seems to me to be going in that direction, with everything from warrantless wiretapping to the 'Show papers' provision of the Arizona immigration law.
However, Wiki cites the IRS code as just saying 'a citizen or resident of the US.' That doesn't sound to me like it would cover past short-term residents, but who knows. And it doesn't seem to mention individual investors, only companies and the like, so I would think the tax reporting would be the duty of the company if it has a US connection, not the individual. But maybe that's not the case?
From the point of view of the IRS, if banks who refuse to provide data refuse to serve US citizens, that's probably all the better, since the US authorities would actually prefer millionaires to do their banking here where they can be taxed more easily, and where the banks' profits stay here as well. And if it drove millionaires to bank in non-cooperating offshore tax havens or rogue states, that might be worse than before -- but don't people planning to evade taxes pretty much do that already?
I obviously missed the details in the news, since even the term FATCA (hmm, fat cat ...?) was new to me. But from the little I gathered when something or other changed not too long ago, it sounded to me like the main effect was that Switzerland was no longer going to be in the non-cooperating tax-haven category, if it wanted to be on good terms with the US in other contexts. That doesn't actually seem unreasonable, especially if Swiss banks had previously been shielding money launderers and other criminals. But did I miss something?