Monday, August 29, 2011

IRS Includes FBARs, Other Foreign Returns In Extension for Offshore Asset Disclosure

The Internal Revenue Service Aug. 29 said it would include foreign bank account and other foreign information reports in the nine-day extension it granted to taxpayers seeking to participate in the agency's Offshore Voluntary Disclosure Initiative (OVDI), in what one stakeholder said was a welcome decision.

The move is the latest news for the initiative, which allows taxpayers to voluntarily disclose their offshore assets in exchange for a set penalty structures and the chance to avoid criminal prosecution. Taxpayers also can catch up if they have missed filing the Report of Foreign Bank Account (FBAR), or other information returns such as the Form 5471 for controlled foreign corporations and Form 3520 for foreign trusts, as long as they have reported all their income and paid all their taxes.

On Aug. 26, IRS gave taxpayers an extra nine days to participate in the broader OVDI because of the potential impact of Hurricane Irene, moving the deadline from Aug. 31, 2011 to Sept. 9, 2011.

On Aug. 29, the agency updated its frequently asked questions and answers on the program with a similar extension for delinquent FBARs or other foreign information returns. For questions 17 and 18, IRS said as long as taxpayers have reported and paid tax on all their taxable income, it will accept the FBARs and such forms as the 5471 and 3520 through Sept. 9, 2011.,,id=235699,00.html.

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