As the August 31, 2011 deadline for participating in the Internal Revenue Service’s 2011 Offshore Voluntary Compliance Initiative (OVDI) approaches, the IRS announced on June 2 that they will grant taxpayers a 90-day extension to participate in the program.

Although the IRS February 8, 2011 introduction to the 2011 OVDI emphasized that the August 31 deadline was firm, the IRS now says that it will give a 90-day extension only to those taxpayers who have made a good-faith attempt to comply with the terms of the OVDI, but were unable to submit a complete package. The request for extension must be submitted in writing before August 31, 2011 and must include a statement explaining why the taxpayer is seeking an extension.

In this announcement, significant offshore penalty relief was also added for U.S. citizens who reside in foreign countries that can show that they have timely complied with all tax reporting and payment requirements in the country of residency; and have $10,000 or less of U.S. source income each year. 

For a taxpayer to have been required to file an FBAR, that taxpayer must have had a financial interest in any financial account in a foreign country, if the aggregate value of such accounts exceeds $10,000 at any time during the calendar year, even if the accounts were closed during that year.

Remember 2010 FBAR (Form TD F 90-22.1) filings are due June 30th, with no extensions available. The IRS states on its website that, “The FBAR is due by June 30 of the year following the year that the account holder meets the $10,000 threshold. The granting, by the IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR.”

Steven Goldburd is a partner with the law offices of Goldburd McCone LLP and can be reached at 212-302-9400 or http://www.goldburdmccone.com.

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(Steven Goldburd – YWN)