IRS Announces Important Change to Foreign Bank Account Reporting (FBAR)

Foreign Bank Account Reporting -- Form TDF 90-22.1

On Feb 8, 2011, the IRS announced a Second Special Voluntary Disclosure Initiative for taxpayers with unreported (and untaxed) foreign bank and other financial account assets.
The new program began this week and expires Aug 31, 2011.  It is different from the previous program which ended Oct 15, 2009.

The new initiative runs from now until August 31, 2011 and differs in some material ways from the first Offshore Voluntary Disclosure Initiative which expired October 15, 2009.

The second program will cost non-compliant taxpayers more than the first.

FBAR penalties, imposed under the Bank Secrecy Act, are increased to 25% for taxpayers with total account balances of $75,000 or more.   Under the previous program, penalties were 20%

If the account balances are less than $75,000, the penalty is 12.5%, 

In addition to the FBAR penalty a  taxpayer must:
  1. file all un-filed returns or amended returns for the years 2003-2010, 
  2. pay all taxes, interest penalties and an accuracy related penalty as imposed under the Internal Revenue Code 
  3. file all un-filed FBAR’s

See below re how to make a voluntary disclosure:

How to make a Voluntary Disclosure under the 2011 OVDI