United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, U.S. citizens must file an F-Bar with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
The IRS is offering an amnesty program for offshore account holders. In general, the amnesty program offers the opportunity to avoid criminal felony tax charges if the taxpayer discloses the foreign bank account information along with additional information via a specific Voluntary Disclosure program. The deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts is October 15, 2009. The IRS has announced that there will be no further extensions.
Those taxpayers who do not voluntarily disclose their hidden accounts by this deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.
The U.S. Department of Justice is actively pursuing offshore account holders and has already begun criminally prosecuting taxpayers for failing to report offshore accounts and tax evasion. So far, the government has secured six guilty pleas in its effort, including one on Friday, where a New Jersey man pleaded guilty for failing to report about $6.1 million he had held in a UBS AG Swiss bank account.
We expect that the U.S. Department of Justice will publicize foreign bank account tax evasion prosecutions cases in an effort to encourage account holders to come forward.
We urge you to schedule an appointment with our office immediately if you believe you are subject to Foreign Bank Account reporting provisions.