The Progression of the IRS Offshore Voluntary Disclosure Program
The tax code is complex and always changing. One part of the code that many taxpayers are not aware of is the requirement to disclose foreign accounts and assets. The form number is TD 90-22.1, also known as the "FBAR," and it requires taxpayers with an aggregate amount that exceeds $10,000 in offshore assets to disclose those assets. The FBAR form does not assess a tax on foreign assets, but a failure to disclose could lead to civil penalties or possibly criminal sanctions.
The IRS introduced a program in 2009 that allowed taxpayers who failed to disclose their offshore accounts to receive a certain level of amnesty in exchange for a penalty equal to 20% of the total value of their foreign assets. A similar program was available in 2011, with the penalty increased to 25%. Now, the IRS has announced it will continue the program indefinitely at a penalty rate of 27.5%. More information on the 2012 program can be found at the IRS website: http://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program
The IRS now also requires some taxpayers to file Form 8938, Statement of Specified Foreign Financial Assets, in addition to the FBAR. You can read more about the requirements on the IRS's website: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-(FBAR)
This information is not intended to be legal advice. If you have questions about your specific situation, you should consult with an attorney.