IRS Yanks OVDPDeal From Taxpayers With Secret Bank Leumi Accounts – Forbes onforb.es/VMlXCI – Kicks those previously accepted out!
— U.S. Citizen Abroad (@USCitizenAbroad) March 7, 2013
The Internal Revenue Service this week sent faxes to tax attorneys nationwide informing them that clients who were previously accepted into its criminal amnesty program for those who disclose once-secret offshore accounts, have “upon further review” been disqualified. The faxes, signed by John R. Tafur, director of of Global Financial Crimes at the IRS’ Criminal Investigation division, affect dozens of American taxpayers who had undisclosed accounts at Bank Leumi le-Israel Ltd., Israel’s largest bank, says Robert E. McKenzie, apartner at Chicago’s Arnstein & Lehr , who queried fellow top tax attorneys on a private email listserve after he received one such fax this week. He called the IRS’ reversal “scary” and “extraordinary”. Edward M. Robbins Jr., of Hochman, Salkin, Rettig, Toscher & Perez, the big West Coast tax defense firm, confirmed in an email to Forbes that “numerous” Leumi related rescission letters have been received.
Complete article is here.
@Southerner – See the second paragraph of my previous post today. I was advised by the TAS to consider opting out into the Streamlined Program. I would say my IRS Revenue Agent was understanding about my not meeting all of the Streamlined Program requirements, but being a non-filer non-resident seemed to be the major qualification for being accepted into that program.
@badger – It may be the Streamlined Program that is backing up the OVDI opt outs. According to my agent, they have so many Streamlined Program applicants that need to be approved at a managerial level that it slows up the number of OVDI opt outs that can also be approved by the managerial committee. In addition, there are increasing number of taxpayers in OVDI who are opting out to argue reasonable cause. So basically, entering or leaving any program means you will wait, wait, wait.
As for those in OVDI, who are waiting to get their cases assigned to an agent, this is a operations management nightmare stemming from very low throughput. I spoke with the Supervisor of the Team handling my box in Austin when they finally got around to checking it.. He explained the process to me. What happens is that your submission box first goes through Austin for checking and processing. Once all your Statute of Limitations extensions are in order (including news ones that may be necessary as you have waited so long to get to this point) and it is verified that all your documents are there with your submission, your box is put in a queue to be assigned to a Revenue Agent somewhere in the country. It was stated to me that OVDI cases are being handled in the spare capacity of regular agents so this backs things up as there is not a lot of spare capacity available. Once my box got in the queue to be assigned, I was told that reckoning with a wait of another year would not be unreasonable. It made me feel that very little priority was being given to the minnows caught up in OVDI. It made it even more unbearable for me.
@Southerner,
I was very close to entering the ‘Streamlined program’, but backed out for several reasons. Now I am in ‘wait and see’ mode, ready to take evasive action perhaps even reconsider the ‘streamlined program’, depending on how the winds blow. I know you weren’t looking for someone to advise the ostrich approach, however I don’t think that is what I am doing since ostriches don’t pay attention to what is going on around them because their head is in the sand.
@WhiteKat My tax preparer will not give any advise on whether to enter Streamline or not and he says he doesn’t have the liability insurance to give such advice. He says as it is a new program, there is little data to give any kind of indications.
My biggest question is – what could go wrong if you enter it when you meet all their entry criteria.
Once you have surrendered, you have delivered all the data to incriminate oneself.
I don’t want to go ‘Ostrich’ as the whole thing is taking a psychological toll and if I enter the system I would at least have other options once 5 years of filing has passed.
Thanks @not that Lisa
What’s potentially even more tragic about our situation is that if we had not entered OVDI and instead entered the streamlined program last year and submitted the 3 years of returns, the sale of our home would have been a non-issue as it sold in 2008! That being said, we would have still had to file 5 years of FBARs which would have shown a significant balance from the proceeds if the sale, which I imagine would have raised a red flag. Aside from this, our lawyer said that we would not have been able to enter the streamlined procedure because of some ‘sophisticated tax planning’ we require.
It’s an interesting concept that a penalty that’s been paid already would require an assessment of that penalty in order for that penalty to be abated.
@ bubblebustin……………In 2010, my husband and I made a submission to OVDI, to which we are still awaiting a response…… wow > 2 years !!
@badger
Thank you for your kind words of encouragement. The situation is quite insane and I am beginning to feel it may never end, especially with the US incapable of managing itself.
…..very little priority was being given to the minnows caught up in OVDI….
unfortunately there is no other way of putting it plus keep in mind until they get around of making their final calculations … in 1 or 2 years and you find out that you still had under payments from a “position“ your CPA took and that reversal will add up big time for FTF and FTP penalties over those 1-2 years.
@Southerner
For me, the confusion over exactly what is the entry criteria was what gave me pause. I too have suffered and continue to suffer (mostly in silence cause my family thinks I’m nuts), and would love to see an end to this soon. However, the vagueness of the criteria, and previous ‘bait and switch’ maneuvers of the IRS have made me wary. I don’t trust IRS. One mistake in filling out 3 years of tax forms and 6 years of FBARS could land me in a huge pot of water, not to mention all the expense and headache of the process itself.
Like you said yourself, once you have submitted, there is no turning back.
@Not that Lisa! says … have not heard from you in a while ….. how much longer till its over ?
Technically, the tax penalty paid with the OVDI submission is not considered paid. It is a considered a prepayment. Only when the agent makes a decision on whether you will get a penalty and what the amount of the penalty is can your prepayment be applied to your IRS bill.
This prepayment aspect has other negative consequences. For example, if your penalty is waived and you get the money back, you will not get interest on it because it is a prepayment. So under OVDI, the IRS gets to hold thousands of dollars of people’s money for years and not have to pay any interest on it if they have reasonable cause to get it back.
Some people have reported getting interest paid. Good for them. My agent is experienced in the area of individual international tax, which for the most part is good, but the agent is clear that OVDI payments are considered prepayments and no interest will be paid to me if I should get anything back.
The agent mentioned something about interest being paid on tax amounts that had been overpaid. I am not sure if that related to refunds for years that could be closed, or something else.
@mike
Sorry, my error. It’s been 15 months, which is bad enough.
Great info, thanks for sharing.
@Mike Tarantes – I opted out about one month ago. The agent had other cases to attend to and may get to my case this week, or the next one. Basically, the agent does a lot of paperwork to process the opt out. After this is don, what happens after is that my file goes to “the Committee”. I will get an acknowledgment letter when this has happened.
The file will contain my basic facts. The Committee’s main purpose is to make sure I am a good candidate for opt out and all procedural rules have been followed. My reasonable cause arguments will not be viewed at all according to my agent.
The Committee normally takes two weeks (according to my agent), but with all the Streamlined decisions and the increasing opt outs, I should not expect anything in two weeks. My agent did not want to put a time limit on that part of the process.
Once they decide if my opt out can be approved, then I will be assigned again to an agent, which may or may not be the same agent. Anything worthy of examining that has not already been examined will be examined. As I answered several IDRs (Information Document Requests), I can only hope that we have covered everything.
At this point, the agent assigned will also (finally) read my reasonable cause arguments and make a determination.
So how long? Well, on a side note, as usual, the left hand in the IRS does not know what the right hand of the IRS is doing and collections were started on me again by a different Service Center this time. It was a new one that had never been in the picture before. My agent was quite efficient in getting them stopped, but they are only stopped for two months. My agent pointed out to me that if they start again and the opt out process has not ended, the agent can request another hold.
So your guess is as good as mine and the agent’s as to when it will all end.
I don`t know if many here had similar experiences but since I had a bunch of dormant accounts with 4 month to get completed .
But I am ready now for FATCA !
sorry but I must have hit the delete and post button at the same time…..
I don`t know if many here had similar experiences but since I had a bunch of dormant accounts with 4 month to get completed .
But I am ready now for FATCA !
sorry but I must have hit the delete and post button at the same time…..
I don`t know if many here had similar experiences but since I had a bunch of dormant accounts with 4 month to get completed .
sorry but something seems not to work here
I forgot to say, the Committee is so careful and slow because they want to be sure that an opt out is making the right move in giving up the “benefits” of the OVDI program.
For a minnow, one can certainly ask, “benefits to whom?”
all this hullabaloo. The IRS has its head up its ars. They have a couple million FBAR’s they need to process and prosecute, and each one takes 2.5 years to process. How can they maximize their intake when it takes 2.5 years just to screw one person?
@Badger “Will no-one rein in the madness?”
You know the answer. 🙂
This from the WSJ. We’re still coming after you.
This is pay walled, but the link might be available for 7 days. Try it…
Some key quotes…
Jack’s comments…
Bank Leumi U.S. Clients Rejected from OVDP (3/8/13)
@Just Me
Laura Saunder’s article sends the wrong message in what she neglects to say. This is about painting a picture of how the muscle-bound USG is doing a great job pursuing those who won’t pay their fair share and sadly may give some readers the wrong impression that a number of Americans may be using a second citizenship as a means of evading taxes.
@JustMe, they only know how to use the stick. There is no carrot.
@bubblebustin,
I’ve noticed that articles – even those that are more critical of FATCA don’t seem to understand that people can be BORN into dual citizenship outside the US, and only be US persons as a result of parentage. Or be born a border baby, or be born and emigrate with parents – as a minor – which can’t possibly be premeditated!
Do they not think at all?
And the IRS and Treasury are fully aware of these scenarios, but disingenuously prefer not to acknowledge them – as it is hard to believably assert that someone is ‘hiding’ assets and ‘avoiding’ tax by emigrating, when that person has never lived in the US, or left as a baby or minor. Note that the only tax they’ll mention is US tax – because it would spoil their misinformation campaign if they acknowledged that all of us have already paid one set of taxes in full to the country where we live. And that our bank accounts are all fully transparent to our home country tax agencies – and so are not ‘hidden’.
@badger
Eliminate citizenship-based taxation, eliminate the problem…and the attitude. I’ve always had the feeling that if they did, most homelanders would be surprised, thinking it had been that way the whole time and say “oh, that makes sense”.
@ just me …“The government has no intention of letting up in its relentless pursuit of wealthy Americans with secret accounts offshore, and soon it will have even more tools to work with” said Mark Matthews, a former chief of the Internal Revenue Service’s criminal-investigations division who now is a lawyer at Caplin & Drysdale in Washington..
Yes I had a 30min chat with this gentleman last year during my discovery phase and what an arrogant &#*%ç – he is one of the $20K retainer circus advocates and again he does not get it with his one size fits all approach but honestly can you blame him ? He made the last 4 years @ Caplin & Drysdale as much as with the CID of the IRS during his whole life. No one can be trusted ….. “You can take the man out of the IRS but not the IRS out of the man“ .