Menu

Blog

October 1, 2009 - Phil Hodgen

Tax return on extension, how to do FBAR

A second post on this topic. I just pinged emails back and forth with a CPA (hi, S!) I know. Here is a disguised and lightly edited edition of the question and my answer 🙂 because I think this may help some of you out there in figuring out what to do.

QUESTION

I have a client who got his green card in 2006. Starting from year 2006, we did report the foreign bank accounts and interest income in these accounts. (Editor’s note – they filed tax returns, reported the foreign interest, and did the FBAR forms for 2006 and 2007. So far, so good.)

This year we filed an extension for his personal income tax returns. We forgot to file the Form TD 90-22.1 before June 30, 2009. Now his 2008 tax returns are done and ready to file. (Editor’s note – key here is that the tax return is not yet filed, and on a valid extension.)

If we file the 2008 Form TD 90-22.1 now, will we receive a penalty notice from IRS. If yes, how severe it will be? If I attach a statement saying we thought the extension also extends the filing of Form TD90-22.1, will IRS consider waiving the penalty?

ANSWER

The current amnesty extends the window for late filed 2008 FBARs to October 15, 2009. If he is currently on extension, you can get him out with no penalties. The procedure is as follows:

  1. FBAR (original) to Detroit on or before October 15, 2009. That is the arrival date. Not the postmarked date. I would suggest a cover letter explaining that the tax returns are being filed on extension.
  2. Tax returns go where they are supposed to go, on or before October 15, 2009. That’s the postmarked date, not the arrival date.
  3. Suggested: follow the FAQ #9 procedure from the IRS and send a copy of the 2008 FBAR and a copy of the tax return as filed to Philadelphia to arrive on or before October 15, 2009. Can’t hurt, may help. Bombard the IRS with paper. 🙂 FAQ #9 is found here: http://www.irs.gov/newsroom/article/0,,id=210027,00.html
Voluntary Disclosure