IRS Disclosure Deadline for Offshore Accounts

Many, if not most, US expatriates have bank accounts or other financial accounts in the countries where they live. The IRS calls these "offshore accounts", not because they are in exotic places like the Cayman Islands, but merely because they are not in the United States. Readers of this blog know that these accounts need to be reported to the US Department of Treasury every year.

Of course not every one follows the law or even knows what the law requires so it may well be that some of you have not properly reported these accounts. The IRS, in its efforts to crack down on the use of offshore accounts for tax evasion, has offered to let those taxpayers who have not reported these accounts or the income from them to avoid some penalties and criminal charges if they file a voluntary disclosure by or before September 23, 2009.

he IRS Commissioner’s full statement dated March 26, 2009 an be found here:http://www.irs.gov/newsroom/article/0,,id=206014,00.html

If you have trouble sleeping . . .

You might want to check out this Department of Treasury website:

http://www.treas.gov/offices/tax-policy/treaties.shtml

The site gives the full text of all so-called "double taxation" agreements that the United States has entered into with other countries. These treaties form the basis of some of the favorable tax treatment that US expatriates can enjoy, as well helping US expatriates avoid the possible penalty of double taxation (which is the primary purpose of these types of treaties). As a lawyer, I would not suggest trying to interpret or implement the provisions by yourself, but a basic understanding of what these treaties govern can go a long way toward helping you plan for the tax implications of your personal and business activities and make your work with your own tax advisor more productive and efficient.

Important tax dates for U.S. expatriates

June 15, 2009

Anyone growing up in the United States has "April 15th" embossed in his or her memory as "tax day." Most of us probably remember news reports from outside US post offices at midnight, April 15th, showing crowds lined up to get the April 15th postmark on their tax returns. Fortunately (especially since it is already the end of May), the April 15 deadline is not so important to US expatriates. If you live outside the United States AND your main place of business is outside the United States, or you are in military service outside the United States, you have an extra two months to file your federal tax return and pay your tax. This means, in most cases, your return is due no later than June 15th. Be careful in your planning, however, because the extension of time to file and pay does not extend to interest payments. So, if you owe a lot of tax, and don't pay it by the normal due date (usually April 15th), the IRS will charge interest on the tax due until you pay it.

June 30, 2009

This is the due date to file Form TD F 90-22.1 with the Department of Treasury to report any and all foreign bank accounts or foreign financial accounts. You only need to file if the total amount of all accounts is over $10,000. The form, with its somewhat complicated numbering, seems to be an unimportant administrative burden, but don't be fooled. This is the form the owners of those accounts in Switzerland (uncovered during the investigation of UBS) wish they had properly filled out so they would not be embarrassed (or worse) when the government asks them about an account they "forgot" they had. This is also the form that will be getting lots more scrutiny under President Obama's initiatives to close overseas tax loopholes. So, please remember the date and please fill out the form fully and completely.