If you have undisclosed foreign income or accounts, you should consider taking the foreign account amnesty which ends on the 31st of August, 2011. The bank secretary act requires that a Form TD Report of Foreign Bank and Financial Accounts (FBAR) be completed if the total balance of foreign accounts exceeds $10,000. Unfortunately, failure to disclose the above information comes with some very stiff penalties, including a fine of no more than $500,000 and jail time of no more than five years.
The Justice Department has successfully pressured Swiss banks to provide bank account numbers and details on US account holders. This information has enabled the IRS to go after taxpayers who have neglected to disclose the foreign income and holdings. In addition, even if accounts were closed and drained, information has been obtained for the past eight years, and as filings will have to be made for that period.
Rather than go through the tedious task of going after evaders one by one, the IRS have setup an initiate to allow people to come forward without fear of penalty. This IRS offshore amnesty allows you to become compliant and file all the necessary documents.
If you do have undisclosed foreign income or funds, now would be time to get things in order and take advantage of the IRS amnesty program.