Taxpayer spend some of their time monitoring when the statute of limitations expires for certain tax return exposure items. This means watching the calendar until you are clear of audit. Unless you skip filing taxes entirely, you might assume your risk of audit eventually passes.
Taxpayers with a unreported income from a foreign bank account find that this situation is tough to resolve. The safest approach is going into the IRS Offshore Voluntary Disclosure Program, although some clients opt for more aggressive approaches.
Failure to file any one of the various foreign information reporting forms (e.g. 5471, 3520, 8838, etc.) leaves the statute of limitations open for every item in the associated federal income tax return.
Besides the various $10,000 penalty per year, per report, associated with each failure file a foreign information report; the statute of limitations for the IRS to discover and assess tax on the associated with federal return remains open indefinitely and thereby creates a double whammy.
These $10,000 penalty per year, per report, associated with each failure file a foreign information report; apply even where no additional tax is due.