The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply - at least as of now. The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.

For the new program, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure. That is up from 25 percent in the 2011 program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.

Details are available on IRS website link below:

http://www.irs.gov/newsroom/article/0,,id=252162,00.html?portlet=108

If you would like to avail of the benefit of Amnesty under the 2012 Offshore Voluntary Disclosure Program (OVDP) and would like our assistance for the purpose, please call us to make an appointment. We would be happy to assist you in these matters.

FBAR (Report of Foreign Bank and Financial Accounts) and OVDI (2011 Offshore Voluntary Disclosure Initiative)

Earlier, the IRS had required the following actions from those taxpayers who had not submitted their request and any documents.

Identifying information must be submitted to the Criminal Investigation office. This includes name, address, date of birth and Social Security number and as much of the other information requested in the Offshore Voluntary Disclosures Letter as possible. This information must be sent to:

Offshore Voluntary Disclosure Coordinator
600 Arch Street, Room 6404
Philadelphia, PA 19106

Send a request for a 90-day extension for submitting the complete voluntary disclosure package of information to the Austin campus. This request must be sent to:

Internal Revenue Service
3651 S. I H 35 Stop 4301 AUSC
Austin, TX 78741
ATTN: 2011 Offshore Voluntary Disclosure Initiative

Updated relevant questions and answers are as follows:

Q24.1: What if I cannot complete my Offshore Voluntary Disclosures Letter and send it to CI on or before the deadline?

A 24.1 In order to participate and be eligible for the 2011 OVDI, a taxpayer must submit their name, address, date of birth and Social Security number and should submit as much of the other information on the three-page Offshore Voluntary Disclosures Letter as possible on or before Sept. 9, 2011. An incomplete Offshore Voluntary Disclosures Letter must be amended (with the addition of any missing information) and submitted as quickly as possible.

Revised Q 25.1: What if I cannot make a complete submission on or before the deadline?

Revised A 25.1: A taxpayer may request an extension of the deadline to complete his or her submission. Taxpayers requesting extensions must submit their name, address, date of birth and Social Security number and should submit as much of the information described in FAQ 25 as possible with their written request for extension.

Requests for up to a 90-day extension must include a statement of those items that are missing, the reasons why they are not included, and the steps taken to secure them. Requests for extensions must be made in writing and sent to the Austin Campus on or before Sept. 9, 2011 to:

Internal Revenue Service
3651 S. I H 35 Stop 4301 AUSC
Austin, TX 78741
ATTN: 2011 Offshore Voluntary Disclosure Initiative

The Original IRS Announcement

The IRS is currently offering people with undisclosed income from offshore accounts an opportunity to participate in a new, voluntary disclosure initiative in order to get current on their tax returns. The 2011 Offshore Voluntary Disclosure Initiative (OVDI) will be available only through Aug. 31, 2011.

For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.

Taxpayers participating in the new initiative must file complete and accurate original or amended offshore-related information returns and Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an "FBAR") for calendar years 2003 through 2010. They must also file all original and amended tax returns fro 2003 to 2010 and include payment for taxes, interest and accuracy-related penalties by the Aug. 31 deadline.

FBAR filing requirements apply to "United States person", which term includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust. An alien individual is a resident alien if the individual meets the substantial presence test. An individual satisfies this test if he or she has been present in the United States on at least 183 days during a three year period that includes the current year. For purposes of this test, each day of presence in the current year is counted as a full day. Each day of presence in the first preceding year is counted as one-third of a day and each day of presence in the second preceding year is counted as one-sixth of a day.

Depending on a taxpayer's particular facts and circumstances, the following offshore related filings may be required for the period covered:

Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an "FBAR")

United States citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign accounts exceeded $10,000 at any time during the year.

Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

Taxpayers must also report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust and receipt of distributions from foreign trusts under IRC § 6048.This return also reports the receipt of gifts from foreign entities under section 6039F.

Form 3520-A, Information Return of Foreign Trust With a U.S. Owner

Taxpayers must also report ownership interests in foreign trusts, by United States persons with various interests in and powers over those trusts under IRC § 6048(b).

Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations

Certain United States persons who are officers, directors or shareholders in certain foreign corporations (including International Business Corporations) are required to report information under IRC §§ 6035, 6038 and 6046.

Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

Taxpayers may be required to report transactions between a 25 percent foreign-owned domestic corporation or a foreign corporation engaged in a trade or business in the United States and a related party as required by IRC §§ 6038A and 6038C.

Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation

Taxpayers are required to report transfers of property to foreign corporations and other information under IRC § 6038B.

Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships

United States persons with certain interests in foreign partnerships use this form to report interests in and transactions of the foreign partnerships, transfers of property to the foreign partnerships, and acquisitions, dispositions and changes in foreign partnership interests under IRC §§ 6038, 6038B, and 6046A.

If you would like to avail of the benefit of amnesty under 2011 OVDI and would like our assistance for the purpose, please call us to make an appointment. We would be happy to assist you in these matters. We would be billing separately for our services for these services.

Further details of the FBAR and OVDI 2011 can be found on the following links:

FBAR - http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

OVDI 2011 INITIATIVE - http://www.irs.gov/newsroom/article/0,,id=234900,00.html

FAQ ON OVDI 2011 - http://www.irs.gov/businesses/international/article/0,,id=235699,00.html