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IRS Extends Deadlines Due to Hurricane Irene

September 7th

tax deadlineLast week, as Hurricane Irene approached, 29 million people were under a hurricane warning. Many of those individuals were forced to evacuate their homes.  Hurricane Irene affected states all along the eastern seaboard; from North Carolina all the way north to New Jersey and New York Americans felt the wrath of this major storm.

More Time For Taxpayers

As a result, the IRS has announced intentions to extend the due date for their Offshore Voluntary Disclosure Initiative (OVDI). The OVDI exists to encourage those with undeclared income in offshore accounts to repatriate those assets voluntarily, by enticing them with promises of penalty abatement and fewer criminal charges.

There are a few disclosures that can be made under the Offshore Voluntary Disclosure Initiative. The most commonly discussed option, and the one that affects the largest number of taxpayers, is the Report of Foreign Bank and Financial Accounts, or FBAR, requirements. Pat of the Banking Secrecy Act, the FBAR requires any taxpayers with $10,000 or more in foreign accounts to file a form with the IRS by the deadline.

Noncompliance can result in significant IRS penalties. The list of potential penalties that can be applied is, in fact, exceptionally long and can include both civil and criminal penalties.

However, while the OVDI does extend amnesty on many potential penalties, taxpayers should be aware that the program does not excuse them from everything. In fact, those who have not been reporting foreign taxable income will still be required to pay back taxes and interest, as well as any accuracy-related or delinquency penalties. Qualified taxpayers could be eligible for a reduced penalty or penalty abatement scheme, as well as forgiveness of certain criminal charges.

The deadline was previously set at August 31, 2011. It has now been extended to September 9, 2011, to give those affected by the hurricane time to declare any offshore accounts.

 
 
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