Sunday, April 15, 2012

Foreign Account Disclosure and IRS Amnesty

Any United States person, such as a US citizen or a legal permanent resident, with foreign bank accounts with an aggregate value exceeding $10,000.00 must report yearly such holdings to the IRS. This is done by filing a Report of Foreign Bank and Accounts ("FBAR"), form TD F 90-22.1.

By now, the IRS has made it clear that foreign account compliance is one of its major initiatives. The IRS previously said it was unlikely to offer amnesty following its 2009 and 2011 programs. The good news is that on January 9, 2012, the IRS reopened the Offshore Voluntary Disclosure Program ("OVDP") following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced. The OVDP eliminates potential criminal penalties and greatly reduces monetary penalties.