Second Chance by Aug 31, 2011 to Disclose Foreign Accounts

US taxpayers are required to disclose to the government their foreign financial accounts and to pay income tax on any earnings each year. Substantial penalties, including the risk of prison under federal criminal prosecution, exist for non-compliance.  Many people either have ignored or were unaware of these duties.  In 2009, the IRS provided a means for such people to come clean under an "Offshore Voluntary Disclosure Initiative."  Some 15,000 people met the October 15, 2009 deadline.  Many others did not.
Now comes round two, and the deadline is August 31, 2011.  The new disclosure initiative requires participants to pay any back taxes, interest, and penalties and to complete the Report of Foreign Bank and Financial Accounts (FBAR) for up to eight years.  In addition, a disclosure penalty of up to 25% of the highest financial account balance during the 2003 to 2010 time frame will be assessed.  By participating in the program, taxpayers have the protection against criminal prosecution, limited financial penalties, and no more than eight tax years to deal with.
The IRS is also encouraging taxpayers who have made so-called "quiet disclosures" to now participate in this new initiative.  A quiet disclosure is a taxpayer's attempt to become compliant by filing amended tax returns without disclosing to the IRS their prior lack of compliance and paying the substantial disclosure penalty.  The IRS says such taxpayers do not have the protection of the voluntary disclosure program and they could be subject to higher penalties, criminal prosecution, and have an unlimited number of tax years subject to examination.
Detailed information for participating the voluntary disclosure program can be found on the IRS website.  The IRS declares that those who don't come forward now to participate in this program will face higher penalties and the possibility of criminal prosecution in the future.

Update:
Taxpayers may request a 90-day extension of the deadline to complete their submission if they can demonstrate a good faith effort to fully comply by the August 31, 2011 deadline.  The request must be made in writing and include a statement of why certain disclosure items are missing and the actions being taken to obtain the missing information.

Second Update:
The IRS extended the August 31, 2011 due date until September 9, 2011 in light of the problems created by Hurricane Irene.