On Tuesday the IRS announced a new tax amnesty for owners of foreign bank accounts who failed to file FBARs (Foreign Bank Account Reports). The new voluntary disclosure program is known as the Offshore Voluntary Disclosure Initiative (OVDI). The IRS has issued its FAQ for the Offshore Voluntary Disclosure Initiative consisting of 53 questions and answers. Our tax attorneys will be reporting on the details in the coming days and weeks, but for now here are the high points for those foreign bank account holders who have not yet come out of the cold.
• No criminal prosecution.
• Civil FBAR penalty of 25% of the highest account balance during the 8 year period from 2003 to 2010.
• A reduced penalty of 12.5% is available for those accounts which did not exceed $75,000 at any time from 2003 to 2010.
• A reduced penalty of 5% is available for certain inherited accounts • Amended tax returns must be filed, and tax paid with interest for 2003 to 2010 • An “accuracy related penalty” of 20% pursuant to IRC Section 6662 for unpaid tax for the years 2003 to 2010.
• Late filing and/or late payment penalties under IRC Section 6651(a)(1) and 6651(a)(2) in certain cases.
• All documents must be filed with the IRS by Aug. 31, 2010.
If you still haven’t come forward on your offshore financial accounts our tax litigation attorneys are available to discuss your options.
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