While many have been talking about the looming September 23 deadline for the IRS’s Voluntary Compliance Program (“VCP”), there are two items worth noting:

• The IRS has just announced a short-term extension of that program to October 15 • Much less publicized is the fact that it is much broader than most people realize

 

EXTENDED DEADLINE

In its Monday morning release, the IRS announced the following:

WASHINGTON ─ The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts. These taxpayers now have until Oct. 15, 2009. Under special provisions issued in March, taxpayers with these hidden accounts originally had until Sept. 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution. IRS officials decided to extend this deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it. The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions. The IRS also announced that there will be no further extensions.

 

BROAD SCOPE

The key focus in most of the discussions of this VCP is on the requirement for affected persons to file Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts) where they had not already done so and the corresponding income had not been reported.

However, just as important is the fact that the VCP also incorporates either explicitly or implicitly the following disclosures for affected persons who have not already reported and paid tax associated with them:

•		Form 3520 (Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts)
•		Form 3520-A (Information Return of Foreign Trust With a U.S. Owner)
•		Form 5471 (Information Return of U.S. Person with Respect to Certain Foreign Corporations)
•		Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business)
•		Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation)
•		Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships)
•		Form 8858 (Information Return of U.S. Persons With Respect To Foreign Disregarded Entities)

 

CONTACT US!

As always, we welcome your questions and comments. If you’d like to read more, the following can be found on the IRS’s website:

September 23 Deadline for Some FBAR Filers http://www.irs.gov/newsroom/article/0,,id=210174,00.html

Voluntary Disclosure http://www.irs.gov/newsroom/article/0,,id=206012,00.html

Voluntary Disclosure: Questions and Answers http://www.irs.gov/newsroom/article/0,,id=210027,00.html

IRS Extends Deadline for Disclosing Hidden Offshore Accounts http://www.irs.gov/newsroom/article/0,,id=213463,00.html

 

Mark G. Cook, CPA, Partner
Steven J. Cupingood, CPA, Partner
John A. Eckweiler, CPA, Partner
Dan B. Faulk, CPA, Partner
Andrew L. Gantman, CPA, Partner
Donald G. Leve, CPA, Partner
Richard A. Linder, CPA, Partner
Javier Ramirez, Partner
Thomas E. Wendler, CPA, Partner

 

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