The Internal Revenue Service released details of its plan to show some leniency on the penalties for failure to file tax returns and Foreign Bank Account Reports for the American citizens living abroad.

The Internal Revenue Service announced that 12,000 new applications came in from the 2011 Offshore Voluntary Disclosure Initiative (OVDI) program that closed last week. This pushed the total to 30,000 since the program began in 2009.

The IRS is reminding taxpayers that the deadline for the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on August 31, 2011.

In Notice 2011-54, the IRS has extended the deadline for persons who have signature authority over, but no financial interest in, foreign financial accounts to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). They now have until November 1, 2011, to report their signature authority over such accounts during 2009 and earlier years. The deadline for 2010, however, remains unchanged at June 30, 2011.

IRS Posts New Frequently Asked Questions for the 2011 OVDI Program

Holtz, Slavett & Drabkin, APLC is proud to sponsor the 26th Annual UCLA Tax Controversy Institute, which will take place on October 26, 2010, at the Beverly Hills Hotel.

In a recent case of United States v. J. Bryan Williams, the U.S. District Court for the Eastern District of Virginia found that the government had failed to meet its burden to establish by a preponderance of the evidence that a taxpayer willfully failed to report his interest in a foreign bank accounts that were omitted from the individual’s 2000 tax return.

On August 26, 2010, the Swiss government said it had reviewed approximately 4,450 UBS client accounts and that half of the data had already been handed over to the United States.

On July15, 2010, Switzerland’s Federal Administrative Court rejected a UBS account holder’s complaint that sought to prevent the release of her client information to the U.S. tax authorities. The ruling is significant because it signals the likely end-game for UBS account holders with undisclosed accounts who had sought to prevent their account information from being delivered to the IRS.

The U.S. government expects to investigate thousands more cases of wealthy individuals dodging taxes through offshore bank accounts, in addition to the high profile and highly publicized case against UBS AG. It appears that in addition to probing the Swiss and Caribbean bank accounts, the U.S. may be looking at the Asian banks as well.