Another Chance to Disclose Foreign Bank Accounts - August 31, 2011 Deadline

Posted on April 20, 2011 by Jeffrey Cheyne


On February 8, 2011, the IRS announced a second voluntary disclosure program for taxpayers who have not disclosed their foreign bank account holdings. The first disclosure program occurred in 2009. When the program closed on October 15, 2009, there were 15,000 disclosures. The new initiative – called the “2011 Offshore Voluntary Disclosure Initiative” will be similar to the 2009 program, but there will be some changes.

 

  • The disclosure period is two years longer. It covers 2003 through 2010
  • The penalty is higher. It is 25% of the highest aggregate balance during 2003 through 2010. The penalty rate during the 2009 program was 20%.
  • Taxpayers who participate in the program must file all original or amended tax returns and pay the taxes, interest and accuracy related penalties for these eight years by August 31, 2011. 
  • In addition the foreign bank account disclosures – form TD F 90-22.1 need to be filed as well.
  • In limited situations taxpayers may qualify for a lower 12.5% or 5% penalty rate.

In a recent news release, Doug Shulman, the IRS Commissioner, said “Tax secrecy continues to erode. We are not letting up on international tax issues and more is in the works. For those hiding cash or assets offshore, the time to come in is now. The risk of being caught will only increase.”
This is a tougher program than the 2009 voluntary disclosure program, but it still presents a way to reduce penalties and reduce the chance of criminal prosecution.
 

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IRS Extends Deadline for Disclosing Hidden Account

Posted on September 22, 2009 by Jeffrey Cheyne

On September 21, 2009, the IRS announced a one-time extension of the special voluntary disclosure program to October 15, 2009.  Until this announcement the program was set to close on September 23, 2009.

Taxpayers who elect to participate in this program and disclose hidden accounts will have to pay taxes, interest and some penalties.  Taxpayers who don't participate are likelty to face harsher civil penalties and possible criminal prosecution.

Some taxpayers have accounts over which they have signature authority but no financial interest, or a financial interest in a foreign commingled fund.  The deadline for these taxpayers has been extended to June 30, 2010. 

There are two reporting requirements for each year that have to be met.  One is the amended federal income tax return and the other is Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1) which must also be filed.  Unless all foreign bank accounts have a combined value of less than $10,000, this report is an annual requirement in addition to the federal income tax return.

If you have offshore accounts of any kind, you should take this opportunity to review your tax returns for 2003 through 2008 and any reports that you have filed to determine whether or not you are fully compliant. 

The IRS also announced that there would be no further extensions.

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