ABITS & Associates, Inc.

Automated Bookkeeping & Income Tax Service


Foreign Bank Financials Accounts

Dear Clients:

The following letter is intended to provide you general information on the Offshore Voluntary Disclosure (OVDI) and should not be relied upon as legal advice.

On February 8, 2011, a new 2011 Voluntary Disclosure Initiative for taxpayers to disclose their unreported Offshore Accounts was announced. To participate in the OVDI, taxpayers must file or amend their tax returns and form TDF 90-22.1 (Report of Foreign Bank Financials Accounts (FBAR) and pay all delinquent taxes, interest and penalties by August 31, 2011. (The initiative covers 2003 through 2010).

In exchange for participating in the OVDI, taxpayers with undisclosed Offshore Accounts can avoid Criminal Prosecution for their unpaid taxes and my be subject to significantly reduced penalties (General, the civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 of 50% of the total balance of the foreign account per violation). However, under the OVDI, taxpayers will be subject to a 25% penalty on the highest aggregate account balance on their undisclosed account (a) between the 2003 and 2010. If the value of the reduced to 12.5%, Moreover, in the limited situations, a penalty of 5% may be imposed.

This is the Second Amnesty offer from IRS for taxpayers with unreported income from Offshore Accounts. The first Amnesty period ended on October 31, 2009, and produced roughly 15,000 disclosures to the IRS. Participants were subject to a 20% penalty rate covering a 6 year window. Taxpayers that make quit disclosures without seeking the protection of the OVDI run the risk of being examined and potentially criminally prosecuted.   

For further information, please call me at: (310) 326-6888.


Dr. Ahmed M. Abdelnaby, EA., MS., J.D.
Doctor of Jurisprudence
Master of Science degree in Taxation
Enrolled to Practice before the IRS
IRS Certified Acceptance Agent