IRS Update on FBAR for US Citizens, Dual Citizens or Residents Living Outside the US

The IRS has issued new guidance on how penalties are determined when a US citizen, dual citizen or permanent resident lives outside the US and has not filed tax returns or reported foreign bank accounts (FBAR).  In many cases penalties would be waived altogether.

In many cases, the US citizen has complied with the tax requirements in their country of residence.  But US filings have not been made for years.

Often in these cases no US tax is owed because of the Foreign Earned Income Exclusion or the Foreign Tax Credit.   In addition, there's usually no tax penalty either as the penalty is based on the amount of the tax which is "zero".

IRS Announces 90 day Extension with OVDI Program

The IRS has announced a 90 day extension for compliance with the OVDI program (Offshore Voluntary Disclosure Initiative).  Under this program, delinquent FBAR filings can be made at reduced penalties---or in some cases no penalty at all.

The deadline for full compliance is Aug 31, 2011.  But a lot of information is required --- such as bank and brokerage statements going back to 2003.  

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.