Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.
All the hoopla is about the 2011 Offshore Voluntary Disclosure Incentive Program. Yes, I am afraid it is true, that as a U.S. citizen, you are taxed on your worldwide income, therefore you are supposed to be filing tax returns
. Regarding the financials, you are asked to submit a FBAR (Report of Foreign Bank and Financial accounts). SEE BELOW FOR FURTHER DETAILS:
VOLUNTARY DISCLOSURE PRACTICE
The objective of this act is to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance
with United States tax laws
Taxpayers with undisclosed foreign accounts or entities should make a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution.
The purpose for the voluntary disclosure act is to provide a way for taxpayers who did not report taxable income
in the past to voluntarily come forward and resolve their tax matters. For more information regarding the Voluntary Disclosure Practice, you can refer to the IRS website at www.irs.gov under Voluntary Disclosure Practice.
**Please note that any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year must file a FBAR.
A FBAR is a Report of Foreign Bank and Financial Accounts.
Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. **If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records.
Under the penalty provisions found in 31 U.S.C. 5314(a)(5), it is possible to assert civil penalties for FBAR violations in amounts that exceed the balance in the foreign financial account. You can find information on FBARs on the IRS website as well.
For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties in certain narrow circumstances.
Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties. All original and amended tax returns must be filed by the deadline.
The FBAR (Report Of Foreign Bank And Financial Accounts) is IRS Form number TD F 90-22.1 The general instructions and definitions will be helpful to you in completing the forms associated with the report. You can also refer to the IRS website for more information regarding this matter.
Help in completing Form TD F 90-22.1 (PDF) FBAR, is available at(NNN) NNN-NNNN(toll-free inside the U.S.) or(NNN) NNN-NNNN(not toll-free, for callers outside the U.S.). The form is available online at IRS.gov and Financial Crimes Enforcement Network Web site or by telephone at(NNN) NNN-NNNN You can also contact the Detroit Computing Center Hotline at 1-800-800-2877, select option 2.
Do not hesitate to let me know if I can be of further assistance regarding this matter.