Story on IRS Voluntary Disclosures #OVDP Results to Air May 14th on @NPRs “All Things Considered”

59 thoughts on “Story on IRS Voluntary Disclosures #OVDP Results to Air May 14th on @NPRs “All Things Considered””

1. http://www.npr.org/blogs/thetwo-way/2013/05/10/182867374/irs-apologizes-for-singling-out-tea-party-and-patriot-groups

   Seems they may not be supporting the IRS: also today:
   IRS Apologizes For Singling Out Conservative Groups
   “One of the groups, the Tea Party Patriots, has released a statement rejecting the apology. It says, in part:

   “The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power,” said Jenny Beth Martin, National Coordinator for Tea Party Patriots. “This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach. It is suspicious that the activity of these ‘low-level workers’ was unknown to IRS leadership at the time it occurred. President Obama must also apologize for his administration ignoring repeated complaints by these broad grassroots organizations of harassment by the IRS in 2012, and make concrete and transparent steps today to ensure this never happens again. We reject a simple apology that does nothing to alleviate the danger of this happening again.”

   NPR’s Peter Overby is due to have more about this later today on All Things Considered. Click here to find an NPR station that broadcasts or streams the show. Also watch It’s All Politics for more.”

2. @Just Me
   Thanks for the heads up. I’ll be sure to listen.

3. Thanks, I’m going to try to listen too if I can get it to work here in the UK…I may have to wait till tomorrow though due to the time difference, etc.

4. @Just me, thank you for participating. You have and are making a difference on behalf of those not yet able/ready to do the same.

   We will watch and try to comment to counter the usual ignorance.

5. it’s on now—many states have web radio. Let’s hope that the article I posted above is not late breaking news which might over-ride it

6. I see the audio is now pending online, so in an hour or so it should be available…

   http://www.npr.org/programs/all-things-considered/

   Also, just saw this from Jack Townsend. I have not yet read the story he references..

   http://federaltaxcrimes.blogspot.com/2013/05/cheating-is-cheating-except-when.html

7. I am listening live to WKSU, at http://www.wksu.org

   nothing yet, at 42 mins in

8. not today I guess

9. Well, David doesn’t control the scheduling, so assumed it got bumped for other stories. In some ways I am relieved, as my wife is very nervous about it! It is that shame of failure thing and worried about what friends might think. It is a story we have only shared with very close friends, and then after I was at the end of the 2 year, 851 day process. I remember clearly how alone it all felt at the time. 🙂

   I don’t see it online either, so maybe the weekend show…

10. Oh, that’s disappointing. I really wanted to hear that NPR episode but hopefully it was simply rescheduled and not put on the shelf. Keep us posted, Just Me, and thank you very much for doing the interview.

11. Thanks for doing an interview for NPR, Just Me. Similar to the HuffingtonPost (HuffPost Live) segment they were gong to have some time ago on US Citizens Abroad and all that entails; it too disappeared from the radar all of a sudden, never to surface again. Strange.

12. Well, I have to assume this is just a scheduling issue… That happens a lot when a producer of the show makes the selections of what stories to run who were submitted by various journalist. David emailed me that it was going to run this evening. He was probably told that by ATC, but obviously that is NOT what happened. I wouldn’t be surprised to see it show up now on the weekend shows or on Monday. I am pretty sure that David will contact and advise. I will let you know if I hear more…

    BTW, this was an interesting tidbit I got from an immigrant I know who has opted out of the program and had a favorable response after all the time, anxiety and effort.

    He had just got an email from someone he was helping through the process.

    He says….

    You advocate openly and I work to help people underground
    Can you see how many these little guys ended up pay 1000 times more on penalty for cheating only a lunch

    Message from one he is helping

    I opted out last Friday and fingers crossed, my case is very simple.. Total interest from 2007 to 2010 is $34, but penalty comes to $27,000!!! this was because i had a huge balance for 6 days -!!

    Praying to god that IRS will understand and let me live my life.

    Thank you for your help on the letter, without this letter – I could have done nothing except admitted myself into hospital after losing most of my life savings.

13. @Just Me, obviously the IRS hasn’t learned a thing. Sad to hear about how that person is suffering so needlessly over 34. interest. Truly, they must have been told to go after the penalty revenues – if only the TAS could make them turn over memos to that effect. Obviously it isn’t ‘compliance’ they are after. Obviously it isn’t ‘education’ that is their priority – the latest GAO report shows that they admit they haven’t done anything in that vein for new and recent immigrants. And they only offered vague explanations/comments as to why, and what they plan to do about it. Which is basically nothing.

    They’ll let Geithner get away with tens of thousands outstanding over a period of years – and no penalty, and Ryan forgot to declare an inheritance – with no penalty. But that guy in the email, he’s nailed because of 34. interest?

14. With the IRS scandal upon the Tea Party bubbling, it probably is very good filler for them in a couple Days as other outlets start regurgitating the Tea Party item. THey ought to have a meaningful insight into the problem with the IRS. NPR has a unique opportunity to show the IRS for what it is

15. http://twitchy.com/2013/05/13/it-gets-worse-irs-leaked-conservative-groups-confidential-documents-to-propublica/

    and the IRS leaked the info about conservatives to its favorite press outlets. It’s gonna take awhile before NPR will be able to run the OVDP interviews—-there is too much sh_t in the fan already.

    Trust the IRS with your FATCA data—and where it goes nobody knows.

16. Just received this message from David Kestenbaum

    The story looks like it’s going to air today on All Things Considered at around 5:40 pm eastern. I think on KUOW it will probably air at 4:40pm local time.

    If you miss it the audio will be online afterward.

17. It would be great if the OVDI injustice would make National news as well. Maybe they’ll do something to fix it.

    I also read somewhere that some senators were calling for the resignation of Steven Miller.

    Don’t know if this will actually happen, but we can at least hope for some positive change if a new commissioner gets apointed. Crossing fingers.

    Miller has been as bad as Shulman at addressing Nina’s recommendations.

    I also read somewhere that the White House can’t directly order the IRS to do anything, due to some law passed after some scandal (was it the Watergate?) Found that interesting. I can’t find the article, though.

18. @Chris
    You are correct on all counts

19. Updated headline to show May 14th as new date of airing

20. Disappointing is all I will say for the moment… I have not heard the audio, so not sure how it is expressed.

    Who Hides Money Outside The Country?

    Played mostly into the stereotype, and just interspersed into the narrative already constructed without any reference to the GAO report, or the penalty proportionality.

    I guess I have concluded the media is not really interested in the Minnow story…

    David missed even this… which would have told a different story…

    Maybe it was too much to hope for that he would read this of analysis by Scott Michael

    D. One Size Does Not Fit All

    Tax noncompliance is found in a wide variety of conduct with dramatically varying levels of knowledge or willfulness. We can leave aside for the moment the issues unrelated to offshore accounts. In the relatively narrow categories of behavior associated with unreported bank accounts, private practitioners encountered a broad range of culpability. There were a few of the stereotypical offshore tax cheats — native-born U.S. citizens who, on their own accord, decided to evade taxes and developed plans to use offshore entities and accounts to shield
    from taxation funds earned in the United States.

    That is the media image of offshore tax evaders and an image promoted by IRS public statements. For that group, the penalty levels in the OVDI programs were, in our judgment, appropriate, perhaps even generous when combined with a criminal amnesty.

    It may surprise most observers, but we saw few cases like that. It is anyone’s guess why. It may be that this aggressive and risk-prone group was prepared to let it ride. Or perhaps there simply are not as many of them as anticipated.

    One large group of taxpayers in OVDI #1 comprised persons whose foreign accounts were established by their parents or other family members,with the assets passing by gift or inheritance. Those taxpayers often had knowingly failed to disclose their accounts to their return preparers, and thus they did not report the accounts on FBARs or report the income on their returns. Many of them had family stories involving the Holocaust or political or economic oppression outside the United States.

    The persons who had opened the accounts originally were often foreign-born and had since died. The funds were rarely earned in the United States, and our clients often relied entirely on non-U.S. financial advisers. Many clients were afraid to come forward or to discuss the issue with friends and family, and they believed that if they approached a professional they would send family members to jail or even risk their own exposure by an unethical lawyer seeking a whistleblower reward.

    To us (not to mention to our clients), that group was categorically different than the core tax evader who skimmed funds from a business and deposited them in an overseas account.

    Yet OVDI #1 made no real distinction between that group and the volitional tax evader. While IRS guidance would have reduced the penalty to 5 percent for some inherited or similar accounts, officials interpreted that guidance so narrowly that we joked about the mythical unicorn.

    We suspect that out of the thousands of participants in OVDI #1, very few received that 5 percent safe harbor penalty, even though a large component of the program involved inherited or gifted accounts.

    Starting mostly with OVDI #2, another group of taxpayers began streaming in. They had lived abroad for many years. Some had been born to foreign parents and left this country as infants; many were dual citizens at birth. All had routine ‘‘foreign’’ bank accounts in their country of residence and were fully compliant with the tax laws of that country.

    Few had grown up in countries that taxed worldwide income. Others had been assured by foreign accountants that they did not owe U.S. taxes (which was often true because of the foreign tax credits available to them). A few did not even know they were U.S. citizens. Yet, in part because of frightening publicity in their home country, for the first time, the taxpayers in that group — which comprised probably only a small percentage of non compliant Americans living abroad — were anxious and concerned.

    In the guidance for OVDI #2, the IRS, to its credit, attempted to create a penalty safe harbor of 5 percent as long as these sorts of individuals involved had little or no U.S.-source income.4 But even that penalty structure discouraged most persons in this group from entering OVDI. Most of them owed little or no U.S. taxes, and having to forfeit 5 percent of their unreported financial accounts just for peace of mind seemed excessive, especially given the need to expend thousands of dollars in legal and accounting fees to submit eight years of tax returns and FBARs.

    We can attest that many people in that group are likely, at best, to start filing next year, and that some will simply remain noncompliant and expect, with good reason, that
    the IRS will never find them.

    This phenomenon is being experienced most dramatically in Canada, with its hundreds of thousands of U.S. citizens. Those individuals, many of whom left the United States during childhood before they had entered any tax system, were stunned and angered by recent publicity regarding OVDI #2 in Canada.

    Despite the recently added 5 percent safe harbor for some members of that group, they cannot comprehend why the IRS is clinging to a penalty structure that could take a portion of their net assets when most of them owed no or de minimis U.S. taxes.

    Several highly critical articles and editorials have been published in Canada, and criticism of the United States is gaining political traction north of the border. The increasingly negative attitudes toward the United States, and especially the IRS, hurt cooperation in a critical relationship.

    There were other patterns of conduct that did not fit OVDI: corporate noncompliance, unfiled FBARs from minor children, more complicated and yet legitimate trust structures, and the like. No doubt the IRS initially designed the program believing more hardcore tax cheats would come forward than did. But it was clear by the end of OVDI #1 than most of those who came forward did not fit that category.

    Some agents have conceded that although they would have imposed no penalties in a particular case, they were told to take a hard line. The oddity, of course, is that OVDI penalties may well be higher than they would have been in an audit initiated by the IRS. This turns the VDP on its head.

    The modest efforts to create a discounted penalty regime for inherited accounts or for persons with a life based outside the United States were insufficient to persuade people to enter the program. The IRS’s turnabout on FAQ 35 exacerbated that problem. When it stopped considering willfulness except in an opt-out scenario, the IRS made it plain that it essentially considered nearly every one of these non compliant taxpayers to fit the same mold.

21. Hope the audio is more fair than their headline. Sigh.

    There’s a spectrum in these cases, attorneys say. There are people who went to great lengths to hide money, people who didn’t know they were hiding money, and a lot of people in between.

    One other thing about the 39,000 people have come forward so far: They’re probably a drop in the bucket. Somewhere between five and seven million U.S. citizens live abroad. Fewer than 1 million of them declare offshore accounts, as required by law.

    We live in foreign countries, etc., etc., therefore we are hiding money?

22. I probably should have waited longer and thought this out more, but decided to post this and see if they let it out of moderation….
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Disappointing coverage of the subject. It does speak to a range of those impacted, but hardly gets to the core of the issue.

    It doesn’t answer key questions

    Was the IRS OVDP an effective program to root out Homeland Tax cheats, or were the impacts not as expected?

    Were the penalties applied appropriate for all cases, willful and non willful failure in a One Size fits all approach?

    Of all the revenue that the IRS trumps it has collected, what portion was just penalties? (Hints in the most recent GAO report which seem to indicate penalties were about 66% of the total)

    What has been the impact on future compliance, and what are the unintended consequences of the IRS approach to administration of FBAR penalties?

    Why did filing requirements of FBAR (form TD F 90-22.1) not show up until the 2011 IRS publication 54, but they decided to use the penalty club as the main penalty weapon without notice or educational out reach to hammer away at Minnows starting in 2009?

    Why did the IRS withdraw FAQ 35 secretly and not allow agents to use discretion for non willful failures during their first program (OVDP) and fail to respond publicly to Nina Olson’s Tax Advocate Directive (TAD) to rescind the with drawl?

    I could go one, as there are many more questions that IRS administration of these Disclosure programs should raise in thinking minds, especially in light of recent stories about IRS behavior related to T-party groups.

    I guess it hard for those that haven’t lived it, to understand the failures of this OVDP program and how it was abused and misapplied. I am afraid this story only plays into the standard “hiding’ narrative, and of course, speaks nothing to the issue of why America, the ONLY country in the OECD world that thinks Citizenship taxation is appropriate for Americans living around the globe and wants to penalize them into compliance. Every other country practices a Residency Based taxation, just like the 50 States in the Union, and laugh that the U.S. is so short sighted in how it treats its diaspora.

    I had hoped for some broader discussion on these issues, and how now with FATCA, the IRS is intent on exposing and gathering data on all U.S. Persons living around the globe, but the Headline immediately told me that wasn’t what would be here. It doesn’t meant that the story is wrong, just the emphasis is misplaced, IMHO

    This story is too narrowly confined, I am now questioning my sanity about why I allowed myself to be public. 🙂 I guess I should have been like Charles Falk and just laughed at the suggestion.

    I am sorry that the journalist, in their work up of their story, might have missed this excellent analysis from Scott Michael and Mark Matthews: Here are their credentials:

    Scott D. Michel is a member and the president of Caplin & Drysdale, Washington. Mark E.Matthews is a partner in the Washington office of Morgan, Lewis & Bockius LLP and a former senior IRS official.

    For those are interested in a broader story, you might want to read pages 4 and 5 of this pdf report that he wrote.

    D. One Size does not fit all

    http://bit.ly/10IhBez

    It is a google document, so if you can’t access it, it is also available via an excellent tax blog by Jack Townsend.

    http://federaltaxcrimes.blogspot.com/2011/10/article-on-ovdi-and-beyond-highly.html

    Finally, if you are further interested, and since I am public, I have written something to help other Americans living abroad or even Minnow Immigrants in the homeland who don’t yet know about their obligations related to family offshore accounts. It is called The OVDI Drudgery for Minnows. If NPR is kind enough to let this comment out of moderation, here is the link.

    http://bit.ly/SZDPas

23. What they publish is usually a transcript of the audio. Yes, very disapointing.
    Just Me, when you contacted the journalist, did you give him the same resources you mentioned here and suggested that it would be great if he addressed the injustice of the program, in the light of the GAO report?
    It might be delicate to do that without telling the author how to do his job… Oh well.

24. Well, audio is better than the written text on this story, so I think they did get to the differences between classes of offenders. I guess maybe I should have waited to comment..

    🙂

25. Well, it was lovely to hear your voice, Just Me, but yes indeed it was a disappointing report overall. The limited amount of time given for a complex and nuanced topic was at least part of the problem. There is a huge injustice regarding US “offshore” tax policy which needs to be revealed but I guess NPR senses that Americans have no interest in such. If they can stir up arrogance and vengeance then it’s a go but never try to appeal to whatever might be left of American empathy. What a shame. Someday Americans will be looking for understanding and forgiveness from the rest of the world and it won’t be there. I hope your comment gets posted at NPR.