Some articles, but not any tax attorneys we know, have suggested that the IRS has extended the 2011 Offshore Voluntary Disclosure Initiative (OVDI) for unfiled foreign bank account reports (FBARs) by 90 days. That’s not quite the case. The IRS has published FAQ 25.1 which provides that if an offshore bank account holder is unable to submit the complete required package of documents by the August 31st they may REQUEST a 90 day extension of the OVDI deadline. To quote the IRS OVDI FAQ:
A taxpayer may request an extension of the deadline to complete his or her submission if the taxpayer can demonstrate a good faith attempt to fully comply with FAQ 25.1 on or before August 31, 2011.
Note nothing says that the IRS will GRANT the extension for requesting tax amnesty relief. In order to receive an extension the taxpayer must demonstrate that he has made a “good faith attempt” to comply. The conditions for requesting an extension requires that the foreign bank account owner include in his extension request:
1. A statement of those items that are missing,
2. The reasons why they are not included,
3. The steps taken to secure them, and
4. Properly completed and signed agreements to extend the period of time to assess tax (including tax penalties) and to assess FBAR penalties.
This leaves open the very real possibility that a faulty request for an extension may result in the OVDI deadline not be extended, and the taxpayer exposed to the full set of civil FBAR penalties.
If you think you may need an extension of time to complete your OVDI application, or you would like to get your OVDI package filed on time, call the Los Angeles tax litigation attorneys at Brager Tax Law Group, A P.C. at 1.800.380.Tax Litigator.