IRS Extends Amnesty Deadline
The Internal Revenue Service has extended the deadline to participate in the FBAR amnesty program to October 15, 2009, and has indicated that there will be no more extensions.
Most of the clients that we have consulted declined to participate in the amnesty, but it may be a good idea in some cases.
The amnesty would work well for those taxpayers who are worried about criminal penalties (applying for the amnesty automatically gets the taxpayer around criminal charges). The amnesty, if the taxpayer is accepted, will also significantly drop the penalties imposed by the Service on the taxpayer.
Many taxpayers believe that they will never be caught, and participating in the amnesty is therefore not a good idea. That may be true in many cases, but the risk profile for each taxpayer is different, and the various options should be analyzed and weighed very carefully.
So far, the majority of taxpayers that we have seen participate in the amnesty are those that the amnesty was not really intended to snare. For example, a lot of Iranians, Israelis and Eastern European immigrants have offshore bank accounts. These accounts were funded with money not taxable by the United States (as these people were not US taxpayers at the time). Consequently, the only thing that these people are guilty of, is not disclosing the $12 of interest that they received on their foreign bank account. Hardly the definition of a tax cheat.
Those who have for years been hiding millions of dollars offshore will likely continue to do so.