The IRS announced a one-time extension of the Foreign Bank Account Reporting (FBAR) amnesty program filing deadline to October 15, 2009. The IRS said the extension was the result of repeated requests from attorneys and accountants with clients seeking to meet the original September 23, 2009. This sudden interest follows the government’s August 19, 2009 agreement with a large Swiss bank to share information on U.S. account holders. According to the IRS, taxpayers who do not voluntarily disclose their hidden accounts by the new deadline may face civil penalties and criminal prosecution.
Individuals or entities that have an interest in a foreign financial account of $10,000 or more, or have signature authority over such an account, are required to annually file the FBAR form, officially known as TD F 90-22.1. On March 23, 2009, the IRS announced an amnesty program for taxpayers that did not previously disclose offshore accounts allowing taxpayers to voluntarily disclose such off shore accounts with reduced penalties.
Under the amnesty program, the taxpayer must voluntarily disclose the offshore account to the IRS Criminal Investigation Division, promise to cooperate with the IRS, pay tax on any unreported income from the prior six years, including interest and civil penalties, and in many cases pay a one-time penalty equal to 20% of the highest account value from 2003-2008.
According to the IRS website “taxpayers with undisclosed foreign accounts or entities should make a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. . . . Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution.” Thus, taxpayers are closely reviewing voluntary disclosure and this one-time extension is something for careful consideration.
For questions regarding the information contained in this G&S Advisory, please contact your usual Goulston & Storrs attorney or:
John R. Grumbacher
Steven R. Schneider
Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.
This advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.
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