Foreign Bank Accounts Reporting (FBAR) deadline extension update alert:

If you thought tax deadlines end on 4/15, you are in for quite a surprise. Another deadline is yet upon us. Taxpayers and professional prepares are sorting through new treasury guidance and the limited time amnesty program offered for offshore account holders.

The new administration is cracking down on individuals and entities with secret offshore and foreign bank accounts. In general, Residents and US citizens pay tax on their worldwide income and not just their US sourced income. For years, notorious Swiss Banks promoted their accounts as solutions to evade US taxes. These foreign banks resisted disclosing information about their investors to the IRS unless permitted in writing by their clients. This is changing fast with the US government efforts to track tax evaders using offshore investing. So if you are one of the individuals believing you can continue to hide your foreign bank accounts, think again.

The reporting is the FBAR (Foreign Bank Account Reporting) declaring all foreign bank accounts and financial accounts held by US citizens and residents when the total value exceeds $10,000 at any time during the year.
The deadline to file this form with the Treasury Department is June 30th extended to September 30th
The form used for the declaration is Treasury Department Form: TD F 90-22.1
The financial accounts include checking, and savings bank accounts, brokerage accounts mutual funds, credit and debit cards, retirement plans as well as other financial instruments.
The filing requirement of the FBAR also applies to individuals with signature authority over any financial accounts.
The penalties include civil and/or criminal penalties await individuals who fail to file the FBAR form by the due date. Monetary penalties are between $10,000 to no more than $500,000 and potential imprisonment of no more than five years for failure to file, supply information and report false information.
The information required on the form includes:

a- The filer information including name, address and tax identification number
b- The financial institutions information including name, address, account number and the maximum value of the account
c- The financial accounts where filer has signature authority without any financial interest
d- The financial accounts where corporate filers are filing a consolidated report
The amnesty program offered by the IRS runs through September 2009 for late filers to come forward voluntarily and disclose delinquent reporting without facing imprisonment and a paying the tax on the income in addition to a single 20% penalty plus interest.