By Stacie Clifford Kitts, CPA

So…..If you do have cash or an investment in a foreign account – or have signing authority over a foreign account, you need to make sure you are properly reporting it to the IRS.

Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts is for this purpose. The Form is due and must be received by the IRS no later than June 30 each year. And, if you don’t file it – be ready to receive a whopping $10,000 fine.

In addition, all foreign income must also be reported on your income tax return.

However, there is some good news. The IRS has recently announced a new voluntary disclosure program that allows U.S. taxpayers until September 23, 2009 to disclose any previously unreported accounts and income. Here’s some more good news, if you follow the guidelines of the program, the IRS promises not to refer you to the Department of Justice for criminal prosecution.

For more information, take a look at these frequently asked questions offshore activities.

Since not reporting your offshore activity can subject you to criminal prosecution by the Department of Justice, it is HIGHLY recommended that you learn what your responsibility is concerning this type of activity.

Note: The filing relief deadline has been extended to June 30, 2010 for taxpayers who need to file an FBAR report for 2008, 2009 or earlier calendar years if they meet the following criteria:

1) persons with signature authority over, but no financial interest in, a foreign financial account, and
2) persons with a financial interest in, or signature authority over, a foreign commingled fund.

See notice 2009-62 for more information