IRS Issues Frequently Asked Questions for Voluntary Disclosure of Off Shore Accounts

IRS Issues Frequently Asked Questions for Voluntary Disclosure of Off Shore
Accounts

WASHINGTON, May 7 /PRNewswire-USNewswire/ -- Late yesterday afternoon, the
Internal Revenue Service issued much needed guidance for taxpayers making
voluntary disclosures involving offshore accounts. The IRS Voluntary
Disclosure FAQ contains 30 frequently asked questions and answers, which
provides guidance to taxpayers and their advisors who are considering
voluntary disclosures of previously unreported off shore accounts.

"This is a relief," says Jim Mastracchio, a partner with Caplin & Drysdale.
"I have dozens of clients who wanted to know how the policy would work, given
their particular circumstances."

Mastracchio said that among the questions that have been answered is how to
deal with clients who have signatory authority over a foreign bank account and
failed to file Foreign Bank Account Reports (FBAR), but did not misreport
income because they did not legally own the account.

"There are many taxpayers who held powers of attorney with signatory authority
over foreign accounts, custodial signatory rights over foreign investment
accounts, and taxpayers with signatory rights for an aging family member, all
of whom did not earn any of the foreign income, but were, nevertheless,
potentially on the hook for FBAR penalties because they did not file the
appropriate form with the U.S. Treasury."

The IRS FAQs clarify that those taxpayers are not liable for any civil
penalties. FBAR penalties can be as high as 50 percent of the account balance
for a single year and could expose the taxpayer to other civil and criminal
tax exposure.

The IRS has clarified that if the taxpayer has properly reported income, a
failure to file an FBAR will not subject the taxpayer to any civil monetary
penalties. The IRS advises taxpayers to file delinquent FBARs with the
appropriate IRS office with no risk of civil penalty exposure.

Other issues addressed in the IRS FAQs include how the IRS will address
previously amended return filings; how to claim the current benefits of the
reduced penalties for previous disclosures; and how to calculate the amount of
the penalties that may be due.

A copy of the FAQs can be found at
http://www.irs.gov/newsroom/article/0,,id=206012,00.html
To discuss the new FAQs and the voluntary disclosure policy in general, please
contact Jim Mastracchio at (202) 862-8859.

About Caplin & Drysdale
A leading law firm, Caplin & Drysdale provides a full range of tax and legal
services to companies, organizations, and individuals throughout the United
States and around the world. The firm also offers corporate law counseling,
white collar defense, political activity law counseling, exempt organization
counseling, complex civil litigation services, and employee benefits
counseling. Visit www.capdale.com for more information.

SOURCE Caplin & Drysdale

Heather Maurer, +1-202-862-7857, or Ufuoma Otu, +1-202-449-9804, both for
Caplin & Drysdale