Tax Law Alert: IRS Announces Third Offshore Voluntary Disclosure Program Related to Foreign Bank Account Reporting (FBAR)

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Following the success of the 2009 offshore voluntary disclosure program that ended on October 15, 2009 and of the 2011 offshore voluntary disclosure initiative that ended on September 9, 2011, the IRS has announced a third offshore voluntary disclosure program related to foreign bank account reporting (TD F 90-22.1, commonly referred to as the "FBAR"). The new program generally will be similar to the 2011 initiative. However, the IRS increased the one-time penalty to up to 27.5 percent of the highest account balance since 2003 (the 2011 initiative had a penalty of up to 25 percent). The penalty is reduced to 12.5 percent or 5 percent in certain situations, which are the same as those described in the 2011 initiative. Although there is no stated deadline for participating in the new program, the IRS has warned that the terms of the program can change at any time.

For our previous alert discussing the 2011 initiative and related issues, see Tax Law Alert: Relief Recently Provided for Foreign Bank Account Reporting (FBAR). For IRS guidance on the 2011 initiative in the form of Frequently Asked Questions that generally apply to the new program, see 2012 Offshore Voluntary Disclosure Program. For the IRS news release about the new program, see IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens.

Please contact one of the key contributors if you have questions.

IRS Circular 230 notice: The information contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.

Key Contributors

Emily V. Karr
Kevin T. Pearson
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