US sticks to stand on disclosure of foreign accounts

August 21st, 2011 - 9:27 am ICT by IANS  

Washington, Aug 21 (IANS) Sticking to its stand of not extending the Aug 31 deadline for disclosure of foreign accounts, US tax authorities said those who believe they have not violated the laws can opt out of the voluntary disclosure.

But they would still have to make full disclosure before the amnesty programme under the Offshore Voluntary Disclosure Initiative (OVDI) ends Aug 31, a delegation of Indian community representative under the aegis of the National Indian American Coordinating Council was told Friday.

The Internal Revenue Service (IRS) told the delegation that that would expose them to scrutiny but if their case was genuine, they may escape penalty or pay a much smaller percentage of penalty.

In the simpler cases of non-disclosure, tax payers can represent themselves to the agent after filing all amended statements during the opt-out procedure, they said.

The delegation headed by Thomas Abraham, founder president and chairman emeritus of the Global Organization of People of Indian Origin (GOPIO), met the IRS officials to convey the community’s concerns regarding OVDI.

It stressed that their collective survey of the Indiana American community revealed a very high level of distress verging on panic as most have only recently found out that they are in violation of the law.

The delegation pointed out that the penalty of 25 percent on the highest balance over the eight years span between 2003 and 2010, was totally out of proportion to the presumed wilful violation. “Such a level of penalty itself violates the principle of proportionality on which the US law rests,” it said.

Also IRS agents who deal with the tax payees are not empowered to separate wilful non-compliance from innocent non-compliance.

The delegation also shared the community’s fear of being singled out as targets of IRS inquiry and suggested that as a first and immediate step, the IRS can empower the agents with discretionary judgement.

(Arun Kumar can be contacted at arun.kumar@ians.in)

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