Home » FOREIGN REPORTING » FOREIGN BANK ACCOUNT REPORTING (Page 4)
Category Archives: FOREIGN BANK ACCOUNT REPORTING
IRS Patrol – FBAR Filing Deadline Extended for Certain Financial Professionals
Financial Crimes Enforcement Network
WASHINGTON — The Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) today announced that a small subset of individuals with only signature authority required to file the Report of Foreign Bank and Financial Accounts (FBARs) will receive a one-year extension beyond the upcoming filing date of June 30, 2011.
FinCen today issued Notice 2011-1 that extends the deadline until June 30, 2012, for the following individuals:
- An employee or officer of a covered entity who has signature or other authority over and no financial interest in a foreign financial account of another entity more than 50 percent owned, directly or indirectly, by the entity (a “controlled person”).
- An employee or officer of a controlled person of a covered entity who has signature or other authority over and no financial interest in a foreign financial account of the entity or another controlled person of the entity.
All other U.S. persons required to file an FBAR this year are required to meet the June 30, 2011, filing date. Unlike with federal income tax returns, extensions of time to file are not available.
Today’s notice was issued to facilitate more accurate compliance of FBAR filings in the wake of recent finalization of regulations. The FBAR filing requirements, authorized under one of the original provisions of the Bank Secrecy Act, have been in place since 1972.
On Feb. 24, 2011, FinCEN published a final rule that amended the Bank Secrecy Act regarding FBARs.
The FBAR form is used to report a financial interest in, or signature or other authority over, one or more financial accounts in foreign countries.
U.S. persons are required to file FBARs Form TD F 90-22.1 annually if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.
Related articles
- Report of Foreign Bank and Financial Accounts (FBAR) (bespacific.com)
- Avoiding the Foreign-Account Penalty (online.wsj.com)
Mr. Shulman Our Fearless IRS Leader Is At It Again: Introducing the 2011 Offshore Voluntary Disclosure Initiative – Pay A Penalty and Stay Out of Jail
Image by OECD via Flickr
By Stacie Clifford Kitts, CPA
Well, he is at it again. Mr. Shulman our fearless IRS leader, said that his goal is to get people back into the U.S. tax system, and that’s why the IRS has decided to announced the 2011 Offshore Voluntary Disclosure Initiative (OVDI). But don’t think this new program is a free ride. Nope – there are penalties for disclosing your offshore bank account no no’s even under this new plan.
For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
I can only assume there were lots of taxpayers who didn’t quite make the cutoff for the last disclosure program who are now freaking out about possible prosecution, penalties and interest – specially in light of the recent disclosures by Wikileaks – maybe that has something to do with our latest get out of jail card – maybe not. But I sure can speculate.
Here’s the whole scoop:
IR-2011-14, Feb. 8, 2011
WASHINGTON — The Internal Revenue Service announced today a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”
The IRS decision to open a second special disclosure initiative follows continuing interest from taxpayers with foreign accounts. The first special voluntary disclosure program closed with 15,000 voluntary disclosures on Oct. 15, 2009. Since that time, more than 3,000 taxpayers have come forward to the IRS with bank accounts from around the world. These taxpayers will also be eligible to take advantage of the special provisions of the new initiative.
“As I’ve said all along, the goal is to get people back into the U.S. tax system,” Shulman said. “Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore. This new disclosure initiative is the last, best chance for people to get back into the system.”
The new initiative announced today – called the 2011 Offshore Voluntary Disclosure Initiative (OVDI) — includes several changes from the 2009 Offshore Voluntary Disclosure Program (OVDP). The overall penalty structure for 2011 is higher, meaning that people who did not come in through the 2009 voluntary disclosure program will not be rewarded for waiting. However, the 2011 initiative does add new features.
For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
Taxpayers participating in the new initiative must file all original and amended tax returns and include payment for taxes, interest and accuracy-related penalties by the Aug. 31 deadline.
The IRS is also making other modifications to the 2011 disclosure initiative.
Participants face a 25 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty.
The IRS also created a new penalty category of 12.5 percent for treating smaller offshore accounts. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the 2011 initiative will qualify for this lower rate.
The 2011 initiative offers clear benefits to encourage taxpayers to come in now rather than risk IRS detection. Taxpayers hiding assets offshore who do not come forward will face far higher penalty scenarios as well as the possibility of criminal prosecution.
“This is a fair offer for people with offshore accounts who want to get right with the nation’s taxpayers,” Shulman said. “This initiative offers them the chance to get certainty about how their case will be handled. Just as importantly, those who truly come in voluntarily can avoid criminal prosecution as well.”
The IRS is handling processing of the voluntary disclosures in centralized units to more efficiently process the applications.
The IRS has launched a new section on www.IRS.gov that includes the full terms and conditions on the 2011 Offshore Voluntary Disclosure Initiative, including an extensive set of questions and answers to help taxpayers and tax professionals. The web site also includes details on how people can make a voluntary disclosure.
In the first voluntary disclosure program in 2009, taxpayers faced up to a 20 percent penalty covering up to a six-year period. Taxpayers came forward with about 15,000 voluntary disclosures in that effort covering banks in more than 60 countries.
Shulman said IRS efforts in the international arena will only increase as time goes on.
“Tax secrecy continues to erode,” Shulman said. “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.”
Related Articles
- Text: IRS: 2nd Special Amnesty For Hidden Offshore Assets (forexlive.com)
- IRS Launches New Disclosure Program For Offshore Funds (dailyfinance.com)
- IRS Announces Amnesty to Declare Offshore Accounts (businessweek.com)
- IRS reduces penalties if tax cheats come clean (seattletimes.nwsource.com)
- IRS Offers New Amnesty For Offshore Tax Cheats (blogs.forbes.com)
- IRS Reprises Offshore Tax Amnesty (online.wsj.com)
- IRS reduces penalties if tax cheats come clean (sfgate.com)
- Tax Evaders Told to Come Clean before Crackdown (cbsnews.com)
- I.R.S. Offers New Amnesty Deal for Offshore Accounts (nytimes.com)
- IRS: Tax evaders can avoid jail if they come clean (usatoday.com)
- Mideast unrest complicates Wikileaks (politico.com)
Stacie's Tax Stuff 