The Tragic Story of Expat Alice Versus the US

The following story is true. I have verified this information, but cannot tell you how. I know that sounds strange, but I don't want this person to be hurt. Even a little digging into the following story will reveal many other US expats in the same predicament. Further, I've altered some key details to protect the identity of the innocent.

Blind Justice
Photo by Shawn Rossi

There's an expat I'm calling "Alice". Alice is an American who moved to Europe 40 years ago. Like most expats, she had no idea that she was required to pay taxes. She's regularly renewed her passport and had a couple of trips to the US, but aside from that, she's drawn no benefits from the US government and has never lived in the US or worked for a US company since she left. Aside from the fact that she still has her US citizenship and never taken European citizenship, she is, for all intents and purposes, a European.
She's happy in Europe. She has friends and family here. She has permanent residency, but one thing she doesn't have is a job. Most of her life she didn't make huge amounts of money, but in the last few years, she had a job that paid her well. She used this to save up a small nest egg for retirement.
Then her company laid her off. Due to the recession, they couldn't afford to keep her and she's old enough now that she can't find work. She gave in an declared herself a pensioner and now draws a small pension from the country she lives in, supplemented by her savings. Thanks to FATCA and the recent IRS crackdown on US expats, she is now aware of her obligation to file tax returns, but she's stuck. She can't file because FATCA and FBAR penalties will bankrupt her, but due to FATCA, she's terrified that the country she's lived in for decades might turn her in.
She's going to be a criminal, bankrupt, and quite possibly homeless, even though only in the past few years did she earn enough to owe tax to the US government. If she gets a criminal conviction, she might even find herself deported to the US, a country she no longer knows, where she no longer has friends and only a couple of family members left.
Alice did nothing wrong, but the US is hunting her down and is going to destroy her. She has lived the vast majority of her life in Europe and almost all of her working life in Europe. The US doesn't know about her yet, but there's a good chance they will.
Is this fair? Is this what a free society does to its citizens?