Have you ever had income from a foreign bank account that wasn’t reported on your U.S. income tax return? That income is subject to U.S. tax and the Internal Revenue Service is stepping up enforcement by going directly to the source, foreign banks, to obtain names of U.S. citizens that hold these accounts to cross check the reporting of the income.

A settlement offer was recently announced by the IRS to encourage compliance, and the agency has just announced that it is postponing the deadline for taxpayers to act on its settlement offer to report previously unreported offshore income. This is a “one-time only” postponment from September 23, 2009 to October 15, 2009.

Earlier in the year, the IRS provided the following settlement for all taxpayers that make voluntary disclosure requests:
1) The taxpayer must file amended returns going back 6 years (2003 to 2008) and pay taxes and interest.
2) IRS will assess either a delinquency penalty or an accuracy penalty and no reasonable cause exception will apply.
3) A penalty equal to 20% of the amount in a foreign bank account in the year with the highest aggregate account or asset value will be assessed, in lieu of other penalties that may apply.

The IRS has indicated that no further extensions will be provided and that taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties and where applicable, criminal prosecution.

I had lunch with a colleague recently who is a partner at a national accounting firm. The conversation turned to staff and he communicated how frustrated he was with his. Apparently he had just returned from vacation, reviewed timesheets and was very disappointed in the level of effort that they put in while he was away. He commented on how he needed to be on his people all of the time in order to get any work out of them. When I mentioned that I never feel that way, that our people are very focused on producing results and are even more so when I’m not there, he responded that we have different people and that his firm doesn’t have “those people”. So who are “those people” and how did our firm get them?

We only recruit from the top firms. Firms like his. We recruit high achievers who have a history of success in academics, career, and other aspects of life such as athletics and community service. Successes that require personal responsibility and accountability, hard work, discipline, and devotion. But we don’t have an HR department or recruiting staff to post positions, screen resumes or interview candidates like the national firms do. That can’t be our advantage. As a matter of fact, I am sure that they recruit the same people that we do and have an easier time doing it.

So how did his people, who are such high achievers, become so lazy and unmotivated that they won’t do any work unless someone is standing over them? I doubt that the people changed. I am positive that they are still out there achieving tremendous things in life and in the office. Maybe they are just being measured on, and held accountable to the wrong thing. Maybe when no one is looking, they feel like they can stop the charade and actually get something done. Maybe they should be held accountable for their results instead of activity and time. Maybe then, they would be viewed as one of “those people”.