The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore (foreign) accounts. These taxpayers now have until Oct. 15, 2009.

This is important for those with bank accounts in the Netherlands or elsewhere. US law states that all US persons (citizens, green card holders, visa holders) must pay tax on their worldwide income. In addition to reporting the interest income earned to the IRS, tax payers are required to file form TD F 90-22.1 if the total balance of foreign accounts exceeds $10,000 at any time during the year. In many cases there is tax credit for tax paid on earned interest in a foreign country.

According to the WSJ today: 'most of those accepted into the IRS's disclosure program will owe back taxes, interest and a special penalty that will work out to 40% to 60% of the account balance, plus legal and accounting fees, attorneys say. But the agency has said it is unlikely to bring criminal charges against anyone who steps forward'.

Form TD F 90-22.1:

"Who needs to file? Each United States person who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, must report that relationship each calendar year by filing this report with the Department of the Treasury on or before June 30, of the succeeding year."