In a recent memo, the IRS establishes a procedure offering partial amnesty for taxpayers with undisclosed foreign bank accounts. The deadline to apply for the amnesty is September, 23, 2009. Particular attention should be paid to this offer in view of recent disclosures that Swiss Bank UBS holds about 52,000 secret accounts for U.S. persons worth an estimated $14.8 billion, and the IRS is seeking disclosure of this information. To date, UBS has refused to disclose, claiming to do so violates Swiss law and would subject it to criminal and civil penalties. A federal district judge in Miami is yet to rule on the enforceability of the IRS' summons, but my guess, based on other things happening with UBS, is that the IRS will get the information and come calling on those who failed to report the accounts or take advantage of the amnesty.
Note that the initial review of eligibility will be performed by the IRS-Criminal Investigation Division (those are the IRS special agents with guns and arrest powers), so this should be approached with care and only by those with knowledge and experience in these areas.
Bottom line is, if you have a client with one of these accounts, they need to seriously consider taking advantage of this program.