Recently our office has been swamped with telephone calls asking for help clarifying and dealing with a new development in the United States Federal laws having to do with disclosure of foreign bank accounts.

The Government has introduced its Voluntary Disclosure Program beginning April through September 22, 2009. The purpose of this Program is to identify holders of foreign bank accounts (offshore) and substantially increase the Government’s tax revenue. It seems that the IRS is gearing towards making certain that those under its jurisdiction comply with the requirement of disclosure of any interest (financial interest, or signature, or other authority… 31 CFR § 103.24) over a bank, security or any other financial account in a foreign country

FBAR stands for Report of Foreign Bank and Financial Accounts. You can file the disclosure either by checking off the Box on your Schedule B of your 1040 or Filing the FBAR form (Treasury Department Form 90.22.1). The FBAR Form must be filed by July 1 of the following year.

Unfortunately, as the Government runs out of money, it seems inevitable that certain penalties will make their way to the public. In this case, the penalties for non-compliance are egregious. It seems that these penalties are designed to fill the Government’s need for increase in revenue due to the recent economic downturn.