IRS extends disclosure deadline for foreign bank accounts

US citizens holding accounts in Israeli banks now have an extra nine days to benefit from the Offshore Voluntary Disclosure Program.

By JERUSALEM POST STAFF
August 28, 2011 23:19
1 minute read.
illustrative

taxes. (photo credit: courtesy)

 
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The US Internal Revenue Service (IRS) has extended the deadline for offshore voluntary disclosure initiative requests until September 9 due to the potential impact of Hurricane Irene.

US citizens holding accounts in Israeli banks now have an extra nine days to benefit from the Offshore Voluntary Disclosure Program (OVDP) for American citizens living abroad.

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The initiative has serious implications for US citizens living in Israel because most of them only became aware of the reporting issue last year, and many missed the 2009 deadline for the old OVDP.

Those who won’t use the opportunity face serious consequences.

Starting on January 1, 2013, a 30 percent withholding tax will be imposed on certain US source payments made to foreign financial institutions that did not reach an agreement with the IRS to provide annual information concerning their US account holders.

Examples for such payments include dividends and gross proceeds from the sale of assets, such as stocks and securities.

According to Dave Wolf, a tax partner at Hacohen Wolf, the extra nine days that the IRS has given US taxpayers might be a welcome relief for those who were contemplating making the difficult decision during the last two weeks but didn’t have enough time to think it over or were afraid that they didn’t have enough time to process all the necessary paperwork.

Growing numbers of US taxpayers do not want to wait for the implementation of the FACTA provisions in 2014, when Israeli banks under certain circumstances will disclosure to the IRS who their clients are.

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