Given my practice area, I’m very familiar with Form TD F 90-22.1. That’s the form you use for reporting foreign financial and bank accounts to the Treasury and the IRS. There are severe penalties if you don’t file this form but should have.
The IRS is offering a six month period (it began on March 23rd, and ends September 23rd) where you can voluntarily come forward and avoid some of the penalties. The IRS has published a FAQ that details one example where an individual has a $1 million foreign account that earned $300,000 in interest. If that individual voluntarily comes forward and pays the tax, penalties, and interest he would owe $386,000; if the IRS catches the individual he could owe $2,306,000. There’s also the risk of time at ClubFed.
There are procedures that need to be followed in order to comply with this amnesty. If there are other potential criminal charges you should absolutely consult with an attorney. But this is a rare opportunity to avoid extremely high penalties. If you are impacted by this consult your professional tax advisor and/or attorney now.
Hat Tip: Roth Tax Updates, TaxProf Blog
Tags: FBAR