American citizens and residents often have placed funds in foreign bank accounts, in banks all over the world.
There is a requirement that all of these foreign bank accounts be reported to the United States on an annual basis and that United States income taxes be paid on all of these bank deposit funds.
Many American taxpayers who have been unaware of this requirement are now being pursued for taxes and penalties for not reporting their foreign bank deposits. There are two Internal Revenue procedures that will permit American taxpayers, who have not properly reported their foreign bank deposits, and the income therefrom, to come forward and report their foreign bank deposits. This avoids significant fines and penalties on a United State taxpayer who has not reported foreign bank deposits.
There is a program for those United States depositors who have knowingly evaded reporting their foreign bank deposits. This program is known as the Offshore Voluntary Disclosure Program and has strict requirements because of the fact that the non reporting was knowingly and willfully made. This “Amnesty Program” has strict penalties that are much less than all of the penalties that could have been inserted.
The IRS Streamline Compliance Program
There also is an Internal Revenue Service program called the Streamline Compliance Program that permits United States individuals, who have innocently and unknowingly not reported their foreign bank deposits, to report those deposits at a much reduced penalty than the penalty applicable to the willful violators.