The IRS and Congress have identified unreported offshore investing as costing the U.S. up to $100 billion a year in unpaid taxes. In an effort to combat this problem, the IRS has initiated a 6-month amnesty program which expires on September 23, 2009. Under the terms of this limited amnesty program, taxpayers may approach the IRS and make amends. If done properly and within the time frame, the IRS will not pursure criminal charges.
Traditionally, individuals who did not report all of their income to the IRS faced the possibility of various criminal tax charges including tax evasion or the filing of a false tax return. A taxpayer is required to disclose on an individual income tax return (Form 1040, Schedule B), whether at any time during the preceding year he or she had an interest in, or signature authority over, a financial account in a foreign country containing over $10,000. If so, a separate Form TD F 90-22.1 (“Report of Foreign Bank and Financial Accounts,” commonly known as an “FBAR”) must be filed with the IRS.