Re: If you had more then $10k in neteller in 2006 but didn\'t pay taxes
A couple of weeks ago I listened to an IRS teleconference on FBAR/foreign bank account reporting. Note that none of what I'm about to write is specific tax advice; you should, if you're impacted by this, consult your own professional tax adviser as everyone's situation is different.
The IRS was asked what would happen if someone hasn't reported a prior year and needs to. Would they receive a penalty/fine? In response, the IRS representatives stated that the goal is not to fine non-willful violators who come into voluntary compliance with FBAR. [emphasis added] The IRS stated that anyone filing late (or filing a prior year) should attach a letter to their TD F 90-22.1 explaining why their filing was late (e.g. I didn't know about the requirement). Note that you may also need to amend your tax return to include Schedule B.
So what does this mean? If you had $12,000 at Neteller and have just now found out about the filing requirement, you're probably safe in filing the TD F 90-22.1 late, attaching an explanation, and amending your tax return to show the foreign bank account on Schedule B. (Note that the TD F 90-22.1 is mailed to Detroit, and an amended tax return will be mailed to some other address.)
However, if you had a very large balance at Neteller, and you knew about the FBAR requirements and just decided "I'll ignore this" (e.g. you are a willful violator), you may wish to consult with an attorney.
Finally, as to the chance of an audit by filing this form, no one knows for this year. Years ago, it was close to 100% (by filing TD F 90-22.1). However, because so many are filing this form, the percentage has lowered significantly in the past couple of years (at least as far as I and other professionals I've talked to about this can tell). Given that even more individuals are going to file this form for 2006, it is impossible for the IRS to audit 100% of new filers--they just don't have the manpower.
Finally, these are not the kind of audits that will occur six months after you file the return--they typically happen 18 to 30 months after you file your return.
-- Russ Fox (EA)
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