The Internal Revenue Service announced today a one-time extension until October 15 of the deadline for submission into its offshore compliance initiative for U.S. taxpayers with undisclosed offshore accounts or business activities.

As we reported previously (See Day Pitney ALERT “IRS Crackdown on Failure to Disclose Offshore Accounts”) the offshore compliance initiative allows U.S. taxpayers with undeclared foreign income or assets to participate in a voluntary disclosure program under which they will pay back taxes for the last six years, in addition to interest and certain penalties, which are capped in a fixed amount, in exchange for relative certainty that these taxpayers will avoid criminal liability or more severe civil penalties. This offshore compliance initiative was otherwise slated to expire September 23.

News reports indicate that more than 3,000 taxpayers have already come forward to participate in the offshore compliance initiative.

Although this extension is a welcome relief to taxpayers, in no event should it give rise to complacency. This extension provides taxpayers with the opportunity to spend a little more time considering their options with their tax advisors in order to decide whether enrollment in the program is their best option. Of course, there can be a cost associated with any delay – taxpayers who come under investigation are not eligible to participate in the program.

Taxpayers with undisclosed offshore accounts or business activities are urged to consult with their tax advisors as soon as possible to take advantage of this extension. The IRS also announced that there will be no further extensions.