On September 21, 2009, the IRS announced a one-time extension of the special voluntary disclosure program to October 15, 2009. Until this announcement the program was set to close on September 23, 2009.
Taxpayers who elect to participate in this program and disclose hidden accounts will have to pay taxes, interest and some penalties. Taxpayers who don’t participate are likelty to face harsher civil penalties and possible criminal prosecution.
Some taxpayers have accounts over which they have signature authority but no financial interest, or a financial interest in a foreign commingled fund. The deadline for these taxpayers has been extended to June 30, 2010.
There are two reporting requirements for each year that have to be met. One is the amended federal income tax return and the other is Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1) which must also be filed. Unless all foreign bank accounts have a combined value of less than $10,000, this report is an annual requirement in addition to the federal income tax return.
If you have offshore accounts of any kind, you should take this opportunity to review your tax returns for 2003 through 2008 and any reports that you have filed to determine whether or not you are fully compliant.
The IRS also announced that there would be no further extensions.