Many years ago, it was simple to conceal foreign accounts from the Internal revenue service. Since 9/11, though all that has changed is the Internal revenue service has become much more quick in discovering information. In reality, the IRS already has the data on where these accounts are and who owns them, they are just too occupied sorting through the files to get the time to prosecute everyone. With that in mind the Internal revenue service has promoted its OVDI extension. The present OVDI extension is the third version, and with each new edition, the penalties increase. The existing OVDI extension has no expiration date. However, at any time these terms can change. . The program works in this way: A taxpayer finds a tax lawyer to examine the details of the case and make certain a disclosure into the OVDI extension is the best move. To be able to reconcile eight years of returns to include unreported income and missing FBARs, the tax attorney then has to send a letter in to the Internal revenue service. The taxpayer, if they are competent, pays the taxes and interest due. The taxpayer now has two choices. The taxpayer can agree to the standard penalty structure wich contains a 27.5enalty on the highest account value during the last 8 years. This is the optimum decision when the taxpayer purposely evaded taxes. Or, the taxpayer could choose to "opt-out" of the standard penalty structure and the taxpayer's attorney can then fight for reduced penalties. Typically, this equals a 5enalty on the larger account value. If the account is worth less than $75,000, only a 12.5enalty will be charged. In either case, opt-out or not, the taxpayer's attorney will also complete a mini audit to verify that the taxpayer's asserted income matches the bank account information. If a taxpayer opt-outs and disagrees with the penalty total, the taxpayer can take an administrative appeal. If the taxpayer does not like the outcome of that, the taxpayer can take the case to US tax court. Hypothetically, the US Supreme Court could wind up as the final judge of the penalty amount, however that scenario is very unlikely. Something significant to remember is that once the first disclosure is sent and the taxpayer is accepted by the Internal revenue service into the program, the case becomes civil and they no longer are in danger of criminal charges. If you are thinking about this program though, you need to act quick. If you are under audit or investigation, than you are not eligible to join into the program. Act quickly and get more information about OVDI extension from tax lawyers that concentrate in offshore account disclosures.