New Voluntary Disclosure Initiative Highlights Need for Offshore Foreign Bank and Financial Account Reporting
The Treasury Department and Internal Revenue Service have made enforcement of foreign bank and financial account reporting obligations a top priority for both corporate and individual taxpayers. Reporting is required on the taxpayer's regular tax return and, if the account is large enough, also on a special form known as the Report of Foreign Bank and Financial Accounts (FBAR). The FBAR is due annually by June 30 for accounts maintained during the previous calendar year. Penalties for noncompliance can be extremely severe. In an effort to bring taxpayers with undisclosed foreign accounts into compliance with United States tax laws, the I.R.S. has instituted a voluntary reporting procedure under which taxpayers can notify the I.R.S. of offshore accounts and potentially face less severe penalties.