Substance Matters

Cyberspace has been atwitter since the IRS pushed back the date (to October 15) for eligible taxpayers with previously unfiled foreign bank account reporting (FBAR) forms to take advantage of the IRS’ amnesty program. While it is a good thing for those who may have been in a quandary over what to do, for those who decide to roll the dice it is likely going to be catastrophic.

IRS, Treasury and Department of Justice officials have made a coordinated effort to get the word out to tax practitioners and their clients, through public speaking engagements, the tax press, and mainstream media that taxpayers who fail to file unfiled FBARs during the amnesty period will result in affected taxpayer’s having a very unpleasant experience with the IRS. In this case unpleasant means being subject to criminal prosecution and paying usurious fines, in some cases in excess of the account balance.

So, if you or your clients are still on the fence as to what to do, ask yourself this simple question: Do you look good in orange?

This extension doesn’t sound like generosity on the Government’s part to us. It sounds like the perfect way to preempt “reasonable cause” and the “uncertainty defense.” It will be a tough road, at best, to claim “extenuating circumstances.” The Government comes out looking magnanimous for giving the wayward additional time to file while it gets ready to pounce on the noncompliant.