The US government is intent on finding foreign financial brokerage and bank accounts that US taxpayers own and do not report the income earned. If you have outside accounts and earn income, you should be reporting the income on your Schedule B with your federal tax return. You are also required to disclose this account on Treasury Form TD F 90-22. The form is called Report of Foreign Bank and Financial Accounts.
The deadline for taxpayers to come forth and disclose these accounts is coming due on September 23, 2009. The deadline is imposed for taxpayers to come forth before the IRS discovers the accounts and unreported income. If the income is not reported, you are liable for making a false statement on a tax return and the penalty is a possible sentence in prison for up to three years. The prison term for someone who fails to file the Treasure From TD F 90-22 is five years. In addition, the taxpayers are subject to significant civil penalties of up to 75% of the tax they failed to report and pay.
Because of the high profile cases in the news lately, the IRS is aggressively pursing all U.S. citizens who fail to report. If you have any accounts outside of the United States and have questions, please consult your CPA or tax adviser before the deadline on next Wednesday.