IRS will Not Impose Penalties on Delinquent Foreign Bank Account Reports
May 27, 2009 – The IRS is in the process of cracking down on offshore activities and, as part of this process, is encouraging voluntary disclosures from taxpayers who have offshore accounts. By offering avoidance of penalties and elimination of the risk of criminal prosecution, the IRS hopes to entice taxpayers to come clean regarding offshore activity.
For taxpayers who have chosen to make voluntary disclosures to the IRS but who have failed to file the required Form 90.22-1, Report of Foreign Bank Accounts over the years for which the disclosures are being made, the IRS has announced it will relieve penalties for late filings.
In order to avoid the penalty for failure to file a Form 90.22-1, the IRS asks that delinquent forms be filed by Sept. 23, 2009. Copies of related tax returns must accompany the foreign bank account forms, as well as explanations stating why the reports are being filed late.
Delinquent Forms 90.22-1 should be mailed to:
Internal Revenue Service
11501 Roosevelt Blvd.
South Bldg., Room 2002
Philadelphia, PA 19154
Attn: Charlie Judge, Offshore Unit, DP S-611
The IRS wants all U.S. taxpayers to comply with both the income tax and reporting requirements for foreign assets and income. In March the IRS announced that if you file and meet the requirements set forth below PRIOR TO September 23, 2009, YOUR CRIMINAL AND CIVIL EXPOSURES TO PROSECUTION AND MONETARY PENALTIES COULD BE REDUCED.
There are two parts to this relief – income tax and reporting. If any income has not been fully and properly reported, the taxpayer needs to prepare and/or amend their income tax returns for 2003 – 2008. If any of the assets have not been properly reported on Form TDF 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”), the FBAR needs to be submitted.
For taxpayers who reported and paid tax on all their taxable income for prior years but did not file FBARs, you should file the delinquent FBAR reports according to the instructions and attach a statement explaining why the reports are filed late. Send copies of the delinquent FBARs, together with copies of tax returns for all relevant years, by September 23, 2009, to the Philadelphia address listed above.
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