Wednesday, September 28, 2011

Superseding Indictment for Dr. Ahuja Adding Conspiracy Count (9/28/11)

Jeff Neiman posted a blog this morning in the superseding indictment for Dr. Ahuja. See Jeff Neiman, Superseding Indictment: HSBC India Customer Charged (9/28/11), here. Jeff's Blog entry has a good discussion and link to the superseding indictment, so I recommend it and will not repeat it here, other than to note that the allegations which flesh out any conspiracy charge are quite interesting. I have previously blogged the original indictment which did not include the conspiracy charge, here.
I do note the nature of conspiracy charges in this context by this cut and paste from my book (footnotes omitted):
Not surprisingly, therefore, the Government trots out the conspiracy charge whenever it can imagine more than one bad guy behind the tree – it is so easy to do. The conspiracy count allegations are framed as a cascade of allegations telling a damning story (if true and, although literally true, not misleading), but sometimes producing more heat than light. This contrasts with counts for the tax offenses which are dry, sparse, boring, and usually not even flowered up for dramatic effect. The benefits for the Government are great, and the downsides are few; after all, the prosecutors’ life and liberty are not at stake. This means, of course, that the Government’s power to tack on conspiracy charges can be abused, particularly with a weapon as potent and elastic as conspiracy. The Supreme Court has noted that:
We agree that indictments under the broad language of the general conspiracy statute must be scrutinized carefully as to each of the charged defendants because of the possibility, inherent in a criminal conspiracy charge, that its wide net may ensnare the innocent as well as the culpable.
Addendum on 9/29/11:

1.  In an article today, Lynnley Browning suggests that the superseding indictment's detailed allegations of HSBC employee's skullduggery may be an attempt to ratchet the pressue on HSBC.  See Lynnley Browning , UPDATE 1-U.S. client tax indictment raises pressure on HSBC (Reuters 9/29/10) here.  She says
The superseding indictment signals a ramping up of pressure on HSBC and could lead to charges against two unnamed bankers listed in the new filing, based on past procedures involving Credit Suisse (CSGN.VX), Switzerland's second-largest bank.
2.  On the benefits in the actual case of adding a conspiracy charge, I thought I would cut and paste this from an article I wrote (footnotes omitted):
Conspiracy charges are frequent "add-ons" in charging traditional tax crimes to permit the government to increase its chances of obtaining a conviction. Even beyond the considerable elasticity of the conspiracy concept from a substantive perspective, the conspiracy charge offers the government great advantages. The mere charge of "conspiracy" connotes something sinister, and the law treats a conspiracy as a serious criminal act independent of any offense which might be the object of the conspiracy. Moreover, herding a gaggle of defendants [or unindicted co-conspirators] into a single case with an overarching conspiracy charge may make it difficult for the jury to assess independently the guilt or innocence of each defendant [or unindicted co-conspirator] and invite a finding of guilt by association. Conspiracy cases tend to be more complex as the government mounts extensive evidence to connect the dots - real or imagined - among the alleged conspirators, particularly in allegedly large conspiracies such as involved in Stein. Furthermore, the government gets vicarious Pinkerton liability for offenses committed by others in furtherance of the conspiracy, ability to admit statements that would otherwise be inadmissible hearsay, relaxed standard of proof and relevancy, tolling or refreshing of the statute of limitations by remote participants, and venue in remote judicial forums of the government's choosing. With all of these benefits and more, Judge Learned Hand long ago noted, correctly, that conspiracy is the "darling of the modern prosecutor's nursery."


  1. Hmm. Is Dr. Ahuja planning to fight in court ? The indictment does not seem to contain information that would be contained if he were co-operating (for instance, it doesn't mention when the accounts were opened, whether the source of funds was untaxed income or not). This could be interesting.

    One odd note is that the indictment cites Dr. Ahuja as asking for the bank statements to be sent to an Indian address as proof of the conspiracy, but mentions that he wired money (and large amounts) directly from his HSBC USA account.

  2. To Anonymous @ September 28, 2011 10:51 AM.

    I read the tea leaves to be that, at this point, Dr. Ahuja has not reached an agreement with the prosecutors and the addition of the conspiracy count is a way for the prosecutors to enhance the case at trial by getting all sorts of prejudicial stuff into the record and into the jury's collective mind or any juror's mind.

    In tax cases, even at this stage where the defendant has not signaled that the plea deal being offered is acceptable, the case usually ends up with a plea deal. You might take a look at my prior blog Sentencing - Plea Bargaining and the Right to Trial (9/25/11)

    You comment "One odd note" is a good comment. This can cut both ways and, obviously should it go to trial, the defense will argue that there was no attempt to hide the offshore accounts based on the wire transfers.

    Best and thanks for your comments,

    Jack Townsend

  3. Dr Ahuja's case aside - I can guarantee that a vast majority of Indians in the US who have bank accounts in India (for whatever purpose) get their bank statements mailed to their address in India rather than to the US.

    Several reasons (and none of them have to do anything with tax non-compliance):

    (1) Logistically it makes more sense. You get the statements sent to your family in India. They can use the statements to settle any issues with the bank branch in India if/when they arise (Indian banks don't have strict privacy laws as in the US - and banks often let family members see each others account esp if you are friends with somebody at the bank). This is a cultural issue that IRS needs to understand. Indians are hugely family oriented.

    (2) Indian postal system is far from efficient (mails get lost very often). So it is ingrained in the Indian psyche to avoid giving a long distance mailing address if possible.

    (3) Finally, bank statements can always be viewed online and downloaded when required so there is no real need to have the statements mailed to your address abroad.

    Dr Ahuja may have had nefarious motives, but "bank statements not being received in the US" as a tool to determine wilfulness will sound absurd to many Indians.

  4. 'Dr Ahuja may have had nefarious motives, but "bank statements not being received in the US" as a tool to determine wilfulness will sound absurd to many Indians.'

    I would guess that most Indians wouldn't throw a hissy fit if they receive a bank statements in the US once by mistake the way Ahuja apparently did. Or ask for a HOLD on statements the way Ahuja did at one point. Wilfulness is not determined by one factor, but by a combination of factors. And asking for a hold on mail is a very common practice for Swiss or other purveyors of secret bank accounts. But it has legitimate reasons as well, as you point out.

  5. Speaking using address, when I was about leaving Canada, I went to bank to find a way to update address. I was told by bank that if I use non-Canadian address, the bank will imposed non-resident tax withhold. I could have used my daughter's Canadian address or to use my US friends address. I decided to use US address so it would be "taxed fairly".

    Funny thing about address update in Canadian banks (TD or Royalbank), clients can only update Canadian address online (the web application won't let you use invalid post code and province). During the time I was moving from state to state, I updated address for a short time using Canadian address. Then I had to call back to bank to update US address.

    Bank does use address to decide clients residency -- for tax related issues.

    If I were prosecuted for hiding money, I would have a very strong argument -- check my banks records -- what address I have been using for all these years.

    Just my 2 cents


    Apparently he's a prominent doctor in his town. He paid the back-taxes owed on the interest earned. Why is he still being indicted?

    If the IRS is seeking "deterrent" they've chosen the wrong man. The IRS is being criticized on local TV by his attorney, a former prominent prosecutor.

    It would be interesting to see if a local jury convicts him.

  7. Since we are addressing "address" issue, people should think about what an American going to work in India would do to his bank account, 401k, IRA addresses.

    I would think in such a case, one would be more inclined to give US address that is local (parents may be) to the account or may be get it forwarded to a post box.

    Now this address issue will be absurd for somebody permanently living in India (e.g. US citizen living in India with no family in the US), but does not seem unusual for somebody working temporary in India with work visa.

    It is very obvious from the nitty gritty details provided in the indictment that Dr Ahuja is co-operating with DOJ and they are using him to get to HSBC. He has probably turned over his email correspondence for 5k1 which they are using to scare banker#1 and #2

    Just my 2 rupees !

  9. M -- "Apparently he's a prominent doctor in his town. He paid the back-taxes owed on the interest earned. Why is he still being indicted? "

    You can't get off criminal tax evasion just by paying up the tax due. Otherwise almost no one would ever face criminal tax evasion (of course, I think you indicated earlier that you think criminal tax laws defy economics, you might disagree with that). Dr. Ahuja likely tried a quiet disclosure either before or after being contacted by the IRS, paying up all the 300-400K of income he 'forgot' about earlier because the bank didn't send him a 1099-INT.

    And the indictment mentions money at other Indian banks as well. I'm sure there's more information if the prosecutor seeks to get it.

  10. I disagree that Dr. A is co-operating. The DoJ likely obtained the email correspondence and other account transactions through a subpoena.

    I speculate his lawyer is trying to avoid having Dr A. plead to a felony, which would likely lead to his medical license being revoked. I doubt the DoJ will let him get away with that.

  11. "criminal tax laws defy economics"

    Yes, let's study this matter in detail. What are the economic consequences if the IRS/DOJ wins this case:
    -- the closing of a medical clinic (which rural areas desperately need - they recruit Indian doctors directly from India.)

    -- the laying off of medical assistants

    -- the loss of taxable wages from them as well as from the doctor himself (assuming he loses his license)

    Let's look at the benefits:
    Warning to other Indians or immigrant professionals? To pay taxes? Not to hide money, or else you lose your license.

    And what is the economic benefit of this deterrent? More tax revenue?

    I would say the former wins over the latter.

    Third, what if this goes to the Indian legislature, like it did with the Swiss legislature.

    I predict a train-wreck.

  12. Just one additional comment on addresses.

    As a person who has spent a lot of time out side the US, I have always maintained a US address, so my mail could be collected for me, consolidated, and mailed in one package later.

    This started out when I was transient, because I was traveling living on a sailboat all over the Pacific. Then, when I settled down in one location, I just kept it up. I would rather get one package a month, then try to have all my mail addressed individually to a foreign address.

    So nothing sinister, evasive, conspiratorial or unusual about having your accounts not mailed to you. None of my US bank statements are mailed to me overseas. Haven't done it in 20 years, and won't change now. Nothing conspiratorial about it. It is just a matter of convenience. Beside, with the internet, you really don't need the paper these days.

  13. M, I would suggest you tell the governments of practically every country on Earth that 'criminal tax laws' defy economics. They are all doing it wrong, only you are correct (and you should found your own country to prove that). Even Switzerland has criminal tax laws, as do pretty much all tax havens. Countries that do not have income taxes still have excise taxes, custom duties, VATs or the equivalent and still have criminal tax laws. Thats because without criminal tax laws, evasion becomes simply a probability game, and people can evade taxes happily, knowing they can pay up and get off scott free.

    'hat are the economic consequences if the IRS/DOJ wins this case:
    -- the closing of a medical clinic (which rural areas desperately need - they recruit Indian doctors directly from India.)

    -- the laying off of medical assistants

    -- the loss of taxable wages from them as well as from the doctor himself (assuming he loses his license)'

    First, one of the bedrock principles of laws are that all are equal. Dr. Ahuja may (should) get a break on sentencing, but not on being tried. I actually don't know if his license will be revoked.

    Secondly, its very unlikely all the dire consequences you predict will come to pass. If Dr. Ahuja's practice is as lucrative as it seems to be, someone else will take it over. Its not a desperately struggling poor area we're talking about here. And maybe another Indian doctor would be recruited -- there are plenty of talented Indian doctors who would love to take over such a practice. The loss of a talented surgeon would not be good, and a judge should definitely take that into account at sentencing, but that should not alter the bedrock principle of equality before the law. Otherwise, we would be letting 'indispensable' people off scott free all the time. Obviously laws can be, and are misused, but thats not your argument, as I understand it.

    'Third, what if this goes to the Indian legislature, like it did with the Swiss legislature.'

    Why on Earth would it go to the Indian legislature ? Dr. Ahuja is a US citizen. And even Switzerland would have co-operated in a case like this, where the US has given a specific name (not just a John Doe summons).

  14. Isn't the address issue sort of redundant going forward, with paperless banking? So, going forward, what will DOJ use to prove intent?

    I would bet that more sophisticated "avoiders" would already have paperless banking in place? How does the DOJ reach them? If I were a scheming banker, I would turn over only those accounts that had a "paper" trail, meaning accounts that had not opted for paperless banking.

    To repeat, I appreciate that 'paperless" banking has been in place for the past 5-10 years, but how does the DOJ prove intent as opposed to "forgetting" going forward?

  15. I believe Government banks in India didn't have a concept of periodic statements before 2K7. Since 2K7, they had period based online statements (i.e. you can get a PDF of transactions by from/to date online). Your paper record was always the passbook. There isn't an option to send paper periodically AFAIK. I wish they had sent atleast a 1099-INT to non-residents like Citbank did so I wouldn't be in this mess.

    Anyway, per Bloomberg, it is not the address itself but request for "HOLD" on mail at all addresses that is being looked into. So slight difference.

    It is getting nuttier each day.

  16. Suing a surgeon for financial crimes is almost as absurd as suing a banker for medical crimes. And losing their respective licenses as a result is doubly-absurd.

    (I am thinking of an answer to "N", thank you for your post :).

  17. And the irony of all this is, in our pursuit of tax havens in those "foreign Countries", the biggest tax evasion haven in the world, is where....? Right here in the US of A!

  18. Re:
    "the bedrock principle of equality before the law"

    65.2% of taxpayers (income under 50K) and subject to this hypothetical bedrock equality principle pay 7.8% of income taxes

    3.2% of taxpayers (income over 200k) pay 54.6% of all income taxes, and they are also supposedly equal under this "bedrock" principle.

    If they were really equal, the poor people would have to pay over 8 times the amount they are paying now, and the wealthy would have to pay 1/17th the amount they are paying now.

    Think of it as a flat tax: $8000/person, regardless of income and deductions. (How is that for a campaign promise.)

    Then you see how indebted we are to the wealthy, and how unequal tax laws really are.

  19. 'Suing a surgeon for financial crimes is almost as absurd as suing a banker for medical crimes.'

    By this "logic", no one other than a professional murderer could be tried for murder.

  20. '3.2% of taxpayers (income over 200k) pay 54.6% of all income taxes, and they are also supposedly equal under this "bedrock" principle.

    Then you see how indebted we are to the wealthy, and how unequal tax laws really are. '

    as it happens, I am in the 3.2% range as well, are you going to acknowledge your debt to me ?

    I still can't came out what you're advocating ? Some form of anarcho-libertarianism maybe, since you don't seem to think any laws make sense ?

  21. Dear N,

    Yes I do acknowledge my debt to you. I thank you for contributing many times as much as you proportionally owe, thus granting me (and the rest of us) a higher standard of living.

    With regard to laws. I believe in higher laws: religious laws (commandments, precepts). Laws of science, laws of mathematics, laws of accounting. There are laws of family (Confucius), laws of friendship, laws of honor, laws of poetry, codes of a profession, the "way" in martial arts. There are many good laws, thousands of years old.

    Perhaps you might call them common laws: laws developed over centuries and tested by time, that are commonly held and known. Some know them better than others, some practice them better, and some can teach them, by words and by example.

    Then there are some tax writings issued by Congress in the middle of the night. I am not sure they can be called laws. Certainly not on the same level as the prior laws.

    I am not sure Congress is qualified to make laws, I mean on the level of common law. And almost never on the level of religious law.

    So I take my bearings from these higher laws which I much respect and love, and tread lightly amongst the other ones.

  22. Dear M

    "But think about this for a second. If it says US Citizens, why not accept it as such? If the IRS makes a press release and only mentions US Citizens, what does that tell you? To me it means US Citizens. Particularly those hiding large amounts in Swiss bank accounts. End of press release, end of story"

    The press release is not tax code. In tax code, it says US person, that covers many like visa workers, green card holders etc.

    Can we make a legal argument based on what we read from these press release ? I don't think we can win in the court (as we are expected to understand the tax code).

    Sometimes, the DOJ/IRS press release is trying to emphasize by narrow down to US citizen for a reason. For example, a case involve expat US citizen. The unintended consequence may mislead some immigrants to conclude they are exclude for global reporting requirement.

    What says all about ?

    Be smart/be diligent, this is really a minefield

  23. ij,

    Ah yes, that "US person" concept, was a very broad and very hard one for my green card carrying wife come to terms with.

    It meant that where she was residing at the moment, mattered not. Country of residency did not apply for taxation purposes. She was so designated a "US person", and thus the IRS asserted domain over her. These taxation rules and regs related to foreign accounts did apply to her too, much to her chagrin. It made no logical sense to her, and we had lots of "active" discussion around this point. She is resigned to it now, but given what we have been through, she is not a happy camper :-)

  24. Dear ij,

    Just an idea:

    What if you take a vacation to India to visit your family (for real). And while there you engage an Indian lawyer (barrister, etc.)

    You have him write a letter to the IRS saying that in the matter of the OVDI, he represents you and your family regarding overseas Indian accounts. That those accounts do not belong to you, but to the rest of the family. That it is not your money, but their money.

    That the family according to Indian tradition shares the money within the family and that you were mistaken to represent to the IRS that the money belongs to you. In reality none of it belongs to you, but you have access to it, only for emergencies, because you are a member of the family. (This is the Indian tradition).

    That the family are Indian citizens living in India, have never been to the US, and do not have an obligation to the IRS.

    Based upon these erroneous representations that you made in the OVDI package regarding accounts abroad, the barrister request on your behalf, and on behalf of the family owning the accounts, to exit the OVDI program.

    And that all matters regarding your OVDI be forwarded to him, (as your and your family's representative), in India.

    And you sign the letter too. And some of your family in India signs too.

    I would think this is a non-suspicious way of exiting the program. Ie. your family does not want its money taxed by a foreign country, and is claiming its ownership.

  25. M, as usual you show your deep intellect, perspicacity and understanding in your advice.

    The only problem is that ij is not of Indian background (I think his original background may be Chinese), his offshore accounts are in Canada, and they are largely his personal accounts (certainly the RRSP is a personal account), although I think he said once that a Canadian family member is a co-signatory on an account or so.

    [ ij, sorry if I got some of the facts wrong on your background]

  26. Dear M,

    Thanks for presenting such a thoughtful scheme, and it may be very helpful for some Indians who are indeed in this situation (like having a US person name on Indian accounts for future inheritance reason).

    I am not from Indian, all my accounts are in Canada. And I have been the sole owner of these accounts for many years. My banks send out T slips to me all the time, and they also send a copy to IRS. So there is really no hiding issue here for Canadian US residents. In that sense, I should not have joined OVDI at all -- because it says "for those hide secret accounts offshore".

    Again, thanks for the tip, and I hope some Indians may take this exit approach..

  27. Dear N,

    Yes, you got my facts of my background right. I take it as a complement as people do read my posts.

    In my my OVDI submission letter, I told IRS "I will take my responsibility on the failure of my part, and I will pay huge penalty for very minor tax due as a result, but I will also start to post my message in plain language wherever it can make people (particularly immigrants) aware of their offshore reporting responsibility.

    Just like M's post, I also admire your intelligence on some of your posts like "By this "logic", no one other than a professional murderer could be tried for murder. "

  28. Dear ij,

    I am not understanding your motivation to join the OVDI. I do not mean to be disrespectful but I need to understand how much you understand about this complicated political matter:

    Given that:
    OVDI = Offshore Voluntary Disclosure Initiative

    Please define for me:

    Offshore = ?

    Voluntary = ?

    Disclosure = ?

    You write that your accounts are already disclosed to the IRS by Canadian banks, with T-slips? What are T-slips?

    Initiative = ?

    Thank you,

  29. Dear M,

    Offshore (my def is anywhere not in the taxpayer residency country, but IRS def is anywhere not in US, even so my accounts in Canada are offshore that meet both def of mine and IRS)

    Voluntary, nobody forced me join, but I found this offshore problem, so I joined.

    Disclosure, while my banks should/seem have sent T slips (just like 1099-I form) to IRS, somehow, I failed on my part list these on Schedule B and FBAR, so I am doing it on my part.

    Initiative == I dot know that is the meaning here, I guess it is some kind program launch by IRS, it is same as program but fancy name.

    Thanks for asking, I hope I got it right..

  30. Dear ij,

    Let's go over the terms one by one because I don't think you fully understand what is going on here.

    For the purpose of taxes, offshore means:

    "based or operating abroad in places where the tax system is more advantageous than that of the home country: offshore banking ; offshore fund"

    There is a reason why it is called off-shore, "away from the shoreline" instead of just foreign. Because of some Caribbean islands that are physically located off-shore and also have these tax properties.

    Let's look at Cayman. A small island with population of: 54,878.

    The Cayman Islands are the fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities. There are 600 banks, and over 40,000 corporations registered. The corporations are anonymous and the bank accounts are secret.

    There is no direct taxation imposed on residents and Cayman Islands companies. There are no taxes on profits, capital gains, income or any withholding taxes charged to investors. There are no estate or death duties payable on Cayman Islands real estate or other assets held in the Cayman Islands.

    How do you think the US Govt. feels about this?

    A five-story office building on South Church Street in the Caymans serves as the official address for 18,857 corporations. That building, called Ugland House, is listed in SEC filings. About half those Cayman companies had billing addresses in the U.S., according to a 2008 GAO study.

    President Obama referred to Ugland House:

    “On the campaign, I used to talk about the outrage of a building in the Cayman Islands that had over 12,000 businesses claim this building as their headquarters,” Obama said. “And I’ve said before, either this is the largest building in the world or the largest tax scam. And I think the American people know which it is: The kind of tax scam that we need to end.”

    Are you understanding the tax meaning of "offshore"?

  31. Dear M,

    I am impressed, points well taken..

    However IRS uses Offshore for OVDI (by enforcing FBAR), FBAR is all about "Foreign",

    Of course, OVDI using "hiding assets", I could have just said -- not me, but I know that is not acceptable by FBAR law.

    M, I fully respect your position on high law, but in reality, we really do not have a choice regardless the law is good or not. The Congress passes the law, the executive branches enforce the law, and the courts interpret the law. Only thing we can do is to voice our concern, and voice for change/repeal the bad law.

  32. Dear ij,

    I don't know what your profession is, but let's say it is computer science.

    There is a difference between talking about the latest technology and hacking into and programming your own Iphone.

    In the same way there is a difference between talking about tax laws and practicing tax law.

    The state laws regulate who can practice law (the Bar) and public accounting (CPAs), and the IRS regulates who can practice before the IRS (EAs).

    They all have extensive initial educational requirements followed by comprehensive exams, followed by work and experience requirements, and then continuing education.

    Canada has similar requirements too.

    This is part of the "infrastructure" here.

    So I am making a distinction between talking about laws and actually filing an OVDI or FBAR.

    Although anyone can talk about laws, only very few people (specialized tax professionals, with the above education, testing, and experience requirements) can file an OVDI or an FBAR.

    Just like anyone can talk about the latest technology, only very few people (Visual C programmers?) can modify an Iphone.

    Are you following this...


  33. Dear M,

    Totally agree, just as I said "I have not yet got any traffic violation", as you know it is easy to follow the traffic law (speed limit, stop sign etc), yet it is hard for non-pro to follow the tax law.

    That is why we have to pay pro fee (lawyers and CPAs), and for rich folks, that is not a problem..

    Still, as a taxpayer, one has to do his/her best to follow what he/she understands the tax law.

    As for whether nor not one should join OVDI, it is a matter of choice. Not doing anything when not aware of the problem is not a problem, just like most of us in OVDI -- who likely did not know they were supposed to do FBAR/etc. Once it becomes a known problem, then it is really hard to pretend nothing wrong. Sometimes, I do wish I had never read that Chinese blog regarding OVDI.

  34. 'Although anyone can talk about laws, only very few people (specialized tax professionals, with the above education, testing, and experience requirements) can file an OVDI or an FBAR.'

    Nonsense. Filing an FBAR is very, very straightforward. OVDI -- well, for complicated cases that requires a professional, but maybe not for simple cases. What point are you trying to make anyway ?

  35. Dear ij,

    Did you not pay money for driving classes and lessons?


    To Anonymous,

    Do you have offshore accounts?


  36. Dear M,

    I hope we won't get too far off the topic, I answer your question.

    I did not have to pay driving class, but I did go to a driving school. It was no big deal even for a graduate student. It was more because cost-effective. With driving school record, I could get a lot cheaper on auto insurance, and basically I got all my money back from reduced insurance.

    My driving habit has very little to do with my driving school training, it is more personality -- I am not a risk taker.

    Back to OVDI, I did not use pro. It was for the same reason -- cost-effective. Paying a pro may save some of my time (no cash value as I have a lot time), may also save some money from penalty. Given the small amount offshore with complicated PFIC and 300 pages documents. I do not see it would be cheap for a pro fee. So I decided to do all on my own, and you may be right that I am not good enough to do it. Time will tell.

  37. Dear ij,

    To make an analogy, do you not think you will get your money back from taxes, if you pay a professional to handle you taxes?

    And second, regarding "personality -- I am not a risk taker", do you not see a tax professional as someone to guide you away from, and to protect you from risks? Or you do not see taxes or dealing with the IRS as risks?

  38. Dear M,

    Just a few days ago, I spoke to a friend from China who has been doing very well in his business/manufacture in China. He is thinking to apply for business immigration visa (by invest his money in US). His base will be still in China. For him, investing $500K in US is not a big deal but it gives him a US status as immigrant (green card and later a citizenship, I guess he does look up to Americans -:).

    "Before you talk to your immigration lawyer please talk to a US tax lawyer first", I told him.

    I do believe pro service when the stake is high, so cost-effective. By the way, I do have a little confidence on my own ability to deal with OVDI.

  39. Dear ij,

    How would you characterize the IRS, to your finances.

    1) A financially beneficial organization to you.
    2) A financially neutral organization to you.
    3) A financially damaging organization to you.

  40. Dear M,

    Just read my bedtime story...

    By the way, the guy who was thinking applying for US investment immigration, now has decided to apply for Australia instead. Even Canada is just too close to US, he said.

    "Don't you want US Navy to protect you in case you are in trouble ?"

    "In twenty years, who knows who will be ruling in the West Pacific", he replied..

    That part may be related to your tax and economics theory.

  41. Dear M,

    In fairness, IRS did correct me for missing claiming for Schedule M credit, and sent over $800 that I did not ask for.

    Shall we, as taxpayers also be fair to IRS ?

  42. Dear ij,

    Not knowing about schedule M is like not knowing to signal before turning at an intersection. It is the most basic tax preparation, that no tax preparer would miss, however inept. After doing 100 schedule Ms, everyone learns.

    Compared to schedule M, entering OVDI is like entering the Indianapolis 500 race. It is not advisable for someone who does not know about schedule M.

    If you want a story (it is real):

    A woman walks into HR Block with a letter from the IRS regarding exactly this: schedule M. The IRS corrected her self-made return and sent her extra money, just like with you.

    The professional preparer looked at her return and saw that she had a dependent. Because she had not checked the under 17 box on the 1040, she did not qualify for the child tax credit of $1000.

    HR Block amended her return, but only after making her promise to never do her own return again. She had missed on $1800 of tax credits, for that year alone.

    You look at it as a friendly transaction with the IRS but HR Block just sees ignorance and incompetence (mostly on the self-preparers' part, and sometimes on the IRS' part too).

  43. Dear M,

    A true story of mine, also with HR. That was in middle of 1990 in Canada. The first time, and only time I used pro tax prepare. It was due to a year with a special circumstance. I thought it would be better off to seek pro help. They did a good job compared what I would have done in terms of tax due. That was also the only year I got audit from CRA (Canada's IRS), and I was asked to pay some accuracy penalty plus interest -- luckily no FBAR though.

    Back to OVDI again, the big part of cost is the penalty on base, that is very clear to me, other part, like PFIC, foreign tax credit that I am not familiar with are not big deal at all. So to me, OVDI is just as simple as to make sure how much offshore total balance.

  44. Dear ij,
    May i ask how much rougly your penalty is and tax due is or a ratio of both?

  45. Dear ij,

    I am speculating that the reason for the big tax on base is because in a real offshore jurisdiction there is little or no taxation.

    US taxes on worldwide income (unless that income is taxed higher than the US, if lower, then the US taxes on the difference).

    In a situation like the Cayman islands, that income is not taxed, so the US would want to impose its tax on the net income. They average it as 25% of highest balance over 8 years? That is not necessarily a bad deal, tax-wise (if you wanted to repatriate the money). Future value with compounded interest at 10% would be 214% of the beginning amount.

    Canada of course is not an offshore jurisdiction, so this logic does not apply. But since you entered an offshore program, of course they will apply offshore rules to you.

    It is like entering an alcoholism treatment program and you are not an alcoholic. First that is what they all say, second, all alcoholics lie, and third, no you cannot have a drink. No exceptions.

    What kind of alcoholic treatment initiative makes exceptions? An unsuccessful initiative.

  46. "May i ask how much rougly your penalty is and tax due is or a ratio of both? "

    Without taking foreign tax credit, without taking PFIC lost (as I am too lazy to care about my own small loss), the tax due is around 2K. The FBAR penalty is either 9K or 35K depends on OVDI ruling on RRSP.

    Dear M,

    I agree (and really like) your alcoholism analogy. I am not an OVDI real target. But I don't agree on your offshore definition, FBAR form does not mention one word "offshore".

    Also, regarding foreign tax. Canada's withhold is only 10%, lower than 15% of my rate. So there is tax due.

  47. ij, its probably too late, but I would have suggested making every legal effort to get your tax due down to as close to zero as possible. If your PFICs are in RRSP, then they should be deferred even if IRS has penalty on it. Use foreign taxes too. If tax is 0, you have very strong case for penalty reduction on opt out. Even otherwise, you can show how penalty is orders of magnitude higher than tax due.

  48. Anon, many thanks for your suggestion.

    My RRSP is in mutual fund (so PFIC), but I did not include RRSP in my so-called 2K tax due. I was using tax deferral election. Based on what I have heard rumor, that IRS will not deny late election but still impose penalty on RRSP.

    So the matter is not so much tax due amount anymore inside OVDI, it is as much as IRS can get from the pathetically small numbers of participants (only 12,000).

    I have not yet totally given up TAS and opt out .. just wait to see their ruling...

    Thanks again for kind support..

  49. Dear ij,

    I did not coin the tax word "offshore". It is in the dictionary, which I quoted prior. If it were up to me I would call it "tax-free". "Offshore" has a colloquial, euphemistic, and romantic (associated with sailing) connotation.

    It is in general use only amongst the very wealthy and corporate tax planners, who are avoiding taxes. I doubt the IRS has wealthy tax-evaders on its staff, thus the reason they don't know the application of the word.

    Most immigrants are not wealthy tax-evaders so they don't know the meaning of the word either.

    American politicians on the public dole don't know its application either, so they use it incorrectly. Plus, because they want tax money, they overuse it.

    So its become a runway disaster for those involved.

    It is somewhat humorous though. Like watching poor people imitating the rich by pretending to be rich by wearing fake Rolexes, carrying Gucci bags, and calling their rupees offshore accounts. Sometimes they talk themselves into thinking they really are rich. And then the IRS sends them a tax bill. A comedy of errors.

    The best route is to stay educated about the history and the politics of this situation.

    I suggest that you first find a tax adviser with whom you agree with, as far as definitions and moral and ethical values are concerned.

    If you don't do so, you will have to accept the IRS definitions, and its decisions.

  50. "It is somewhat humorous though. Like watching poor people imitating the rich by pretending to be rich by wearing fake Rolexes, carrying Gucci bags, and calling their rupees offshore accounts. Sometimes they talk themselves into thinking they really are rich. And then the IRS sends them a tax bill. A comedy of errors.
    You couldnt have said it any better. I skimp on many
    things and my wife is also equally frugal and we have
    left some money in offshore rupee accounmt. All this
    noise about OVDI and evasion made us jump in. It is definitely a comedy of errors.

  51. Dear M,

    I never pretend being rich, as I still wear the same clothes I wore over 30 years ago. They still fit very well as I have been trying to save every penny from my food as well -:)

    Even tax pro does not know what is likely the outcome from RRSP (lack of IRS guidance as posted by Jack), it seems not much gain at this point to hire a pro now, maybe when opt out.

    Just a simple reflection on Steve Job's passing,

    While Americans are struggling for jobs, we just lost the biggest Jobs.

    While I am worrying of lack of my own retirement for being living too long, Jobs left with tons money untouched.

    I wish I were the one not Steve Jobs who could have so much to contribute to all....

    Life is not fair !

  52. Dear ij,
    37-40k is definitely a big sum. See if you can
    opt out and argue for a lesser fine.

  53. Steve Jobs tried to make science fiction real by using the existing, fast improving technology.

    Maybe these blogs are a way of empowering taxpayers. If something bad happens to one, the others know and can fight back together.

    But if you and the rest joined an offshore disclosure program without having offshore accounts, I think it is mass psychosis. It makes me question how so many people can be wrong together, at the same time.

    Maybe it is like the housing bubble or the internet bubble. Money makes people do stupid things together.

    I think the you should all opt-out immediately, or the IRS should kick you all out, for its own good, because 12,000 angry immigrants are not good for its image, or bankroll.

  54. "37-40k is definitely a big sum. See if you can
    opt out and argue for a lesser fine.".

    Dear Anon

    Thanks, I will consider. Even inside OVDI, I can still try to argue for 5% penalty on RRSP because I met all the conditions. The account was not open by me (as US person), it was open before I became US person. I have never touched the account since becoming US person. All the money was from employment in Canada as non US person.

    Dear M,

    I am pretty sure most in OVDI are immigrants, and some US expats as it is quite natural they have assets in other foreign countries.

    American US residents who put money in a foreign country (offshore) likely for better tax deal.

    Rather unfortunately, OVDI does not distinguish, so just one size for all...

    Just wonder what is going to happen if all 12000 decide to opt out ?

    It will create more work for IRS -- that means more jobs, and then they will squeeze each of us for more money to pay for these jobs.

  55. We should keep writing to Mr Shulman. This coupled with the Canadian Govt effort, the Indian American association effort may yield some result.
    Not sure why there are no effort from Chinese and other immigrants. Is it easy to invest in china for the chinese immigrants? Do they send funds to china to help support parents, purchase home for retirement etc,.?

  56. Dear ij,

    This is is not how I see the process, but I am judging by my rules, not necessarily the IRS' rules.

    You submitted some paperwork. The IRS looks at the paperwork, and then either agrees with you or does not.

    What you are saying is that if you agree with the tax, then you pay it, if not, then you exit the program.

    But that is not how a tax pro works. You don't go to a tax pro with a large file, expect him to read it all, give you his assessment, argue back and forth, and if you agree with him then you pay him for his time, if you don't agree, then you do not pay him.

    It is an ethical mistake (to my mind) to not pay the IRS for examining your work. You are creating work for the IRS, and someone should pay for that. I understand that the IRS does not know the correct meaning of offshore, but neither do the immigrants.

    Neither is to blame here. But once the parties learn the correct meaning and the correct intent, the parties should correct their papers and the program immediately. The IRS, being a govt bureaucracy is not going to be as nimble as in individual in this regard though.

    Unfortunately, the 12,000 immigrants acting in concert will be as slow as the IRS in learning and acting.

    But you as an individual can act very quickly.

    This is why, given what you know now, if you are likely to dispute, you should exit the program right away, before they expend any time reading your file. If they do bother to read your file anyway, then it's their own choice, not yours.

    If you do exit the program, you should ask them to give you back all the paperwork, since it is confidential, submitted in error, etc.

  57. Dear M,

    Thanks for your time and effort.. and really appreciated.

    Opt out is not to exit the program, I think. I would consider opt out only if the OVDI penalty is too harsh, I would care much less the tax calculation (such as foreign tax credit, PFIC loss).

    Opt out is still considered as VD, so the papers submitted should stay with IRS.

    Of course, if it is really a mistake get into OVDI (such as no tax due), one can certainly go ahead exit, he/she can sleep well if there is really nothing to worry about.

    Based on what I read from some well known tax pro blogs (, some of his clients OVDI have nothing but RRSP. Had I consulted a pro, I would still have been advised to join OVDI.

    No exit for me (if it means totally exit from VD).

  58. Dear ij,

    No problem. I am learning as much as you are.

    I am not sure what opt-out means either. Probably no one does, including the IRS. But if you analyze this, the IRS only has the information you give it. You could give them only the statements or accounts you want to give, or the transactions you want them to see, etc.

    So without your cooperation (voluntary disclosure) they have nothing. This is the case in a real offshore jurisdiction due to secrecy laws. Non-offshore countries have tax treaties and are likely to respond to a specific request for your records, but generally only if the IRS knows where to look.

    This being the case, without your complete records (and cooperation), the IRS does not have a case. With your records they have a partial case, because they don't know if what you provided is complete, or even accurate. It is conceivable that you provided someone else's billions, but you only owe thousands.

    So I understand that they may have to do a comprehensive audit to see what money came and went, etc. It would be very complicated for them.

    But I have another question: what if the other 11,999 immigrants decide to exit the program leaving you as the only OVDI filer left. Would you stay or would you go too?

  59. I am not sure I am addressing a particular concern, but I will take a stab at the concern I believe someone has. The question is whether opting out of the OVDI civil penalty regime has the effect of opting out of the voluntary disclosure program. The crisp answer is no. This does take some explanation.

    The voluntary disclosure program is designed to eliminate the risk of criminal prosecution. By joining OVDI in the first case, the taxpayer eliminates his or her risk of criminal prosecution. That does not change if the taxpayer opts out of the OVDI civil penalty regime. The taxpayer still eliminates the risk of criminal prosecution because he or she is still in the program but is opting out of the OVDI civil penalty regime. All that changes on the opt out is the quantum of the civil penalties that may apply. You know what those civil penalties are in the OVDI regime when you are presented with the option of opting out. By opting out, the taxpayer in essence becomes subject to an uncertain penalty regime (uncertain because there is not enough evidence of what happens in these types of audits).

    A taxpayer will opt out only if he or she believes that he or she can get a better civil penalty result outside the OVDI civil penalty regime than inside. But the benefit of eliminating the risk of criminal prosecution remains.

    All of this, of course, is contingent upon the taxpayer having "cooperated" throughout the process -- submitting all of the required documents and information (e.g., amended returns, OVDI penalty calculations, etc.) and continuing to cooperate even after the opt out. If the taxpayer stops cooperating, then technically the taxpayer gives up the benefit of the voluntary disclosure program and subjects himself or herself to both potential criminal prosecution and uncertain (potentially higher) civil penalties.

    I hope this helps.

    Jack Townsend

  60. Thank you Jack,

    I am not sure that the IRS makes a clear distinction between the last two options: opting-out while still cooperating and no longer cooperating.

    It may simply be a bureaucratic division: you are either in the OVDI building or you are not in the OVDI building. What happens outside the building is not our concern, because we only work with those in the building.

    This is reflected in an IRS press release I remember reading. It said something along the lines that most were agreeing with the taxes and penalties assessed, and that some who did not agree had opted-out voluntarily (with a mutually respectful tone) and some who had become uncooperative or non-responsive were kicked out (mutually disrespectful).

    The attitude was that the OVDI program was a favor to the offshore holders, to legitimize their offshore money, a favor granted by the IRS. And if they did not want to receive this favor, to legitimize their offshore money, by paying the required tax, it was their decision. They were not going to hold it against them, but please don't waste our time if you don't want to pay the tax.

    The implication was that there was a trade of legitimacy for the tax. This is a common feature of tax amnesty programs. If you pay the tax, the offshore money becomes legitimate, if you don't pay the tax the offshore money remains illegitimate. Everybody knows ahead of time the amount of the tax (in exchange for amnesty) and either goes through with it or does not. The percent is fixed beforehand, and does not change during the program.

    (Though I don't understand how the money could remain illegitimate once you've filed amended FBARs).

    The "kicked-out" also implies that they had left the country, or were already out of the country...

    There was no mention of the consequences to either group (who did not agree with the tax assessment), though most pros know the consequences of a chance audit where they find offshore accounts.

    My second point has to do with the certainty of the penalties. "You know what those civil penalties are in the OVDI regime". But some people thought it was 2.5% when they entered (and would not have entered otherwise) and then find out that the IRS wants 50%. This to me is not certain.

    "By opting out, the taxpayer in essence becomes subject to an uncertain penalty regime (uncertain because there is not enough evidence of what happens in these types of audits)."

    How much more uncertain can this get? 0-200%?

  61. Dear ij,
    May i ask how many years of FBAR violation and
    how many years of amended returns are you doing?


    "If removal occurs, the protection
    from criminal prosecution under the 2009 OVDP and 2011 OVDI may be
    compromised. This does not mean prosecution will occur, merely that the
    taxpayer does not continue to have [VD] protections."

    Apparently the IRS terminology is "opt-out" and "removed".

    In either case a committee of managers makes the decision as to how to (and whether to) continue the "examination" given the information already processed.

    "If the case is assigned for a full-scope examination, the examiner ordinarily
    will interview the taxpayer to finalize the scope of the exam. Unless otherwise
    instructed by the centralized review committee, the examiner must open all years
    included in the taxpayer's voluntary disclosure."

    This is what bothers me. If the voluntary information was provided under specific terms and those terms change, then the information disclosure is no longer "voluntary".

    The IRS is making an ethical error here. But likely the ends justify the means for them because without that info, they don't have an audit.

  63. "May i ask how many years of FBAR violation and
    how many years of amended returns are you doing? ",

    Dear Anon,

    It is from 2003 to 2010.

    Dear M,

    IRS can still get taxpayers' record from offshore banks though a court order. FATCA will make it much easier.

  64. To ij,

    "IRS can still get taxpayers' record from offshore banks though a court order. FATCA will make it much easier."

    I think you are wrong. IRS can only wield such power on International banks which have ties to the US.

    Most local Indian banks, for example, will simply refuse to do anything about a IRS court order. And if the attitude of the Indian Govt so far is any indication, they will simply look the other way as they do not want to jeopardize the foreign investments in India by seeming too co-operative to expose its own people to a foreign government.

    This article talks about it:

    Now lets looks at my own case. My bank accounts, for the most part, are in local Indian banks. Some accounts are from before I migrated to the US. Even the bank does not know that I am a US based customer because I didn't bother to get my address changed. IRS wouldn't have gotten to these accounts in 100 years. But here I am participating in the OVDI. Only because of ethical reasons. I could not live with the fact I was in non-compliance once I became aware of the laws.

    I am baring it all to the IRS through the OVDI. I am hiding nothing. But it will be very disurbing to me if instead of appreciating my efforts, they start to audit every single line items in my bank account for the past 8 years and hold me responsible for any inadvertent errors.

    The fact is - as 'M' suggested - I am giving them information that they possibly would have never gotten to by themselves. I am already being punished with the penalty and the stress/strain of doing all these amendments. Now if they make my life more difficult at the time of examination - it will be very distressful.

    I have already lost a lot of faith in this country because of how the Govt used an obscure FBAR law to punish otherwise law-abiding residents like myself. Now if I get a raw deal during the OVDI examination as well - I will of course pay up whatever amount of money they want me to pay - but will soon start packing up to leave the country.

    I just hope that things will not be that bad. And the IRS folks will conduct themselves in a considerate fashion with folks in my kind of situation.

  65. To ij,

    Surely you know after reading all these tax blogs the difference between an offshore jurisdiction and a non-offshore jurisdiction.

    So you tell me, why would an offshore bank not cooperate with the IRS and the US Courts? And why would a foreign but non-offshore government cooperate?

    What are their incentives?

    This also explains why the US Govt thinks you are a criminal.


    Btw, the Swiss Supreme Court declared that the release of names by UBS was unconstitutional, after the fact, despite that the law was passed by the Parliament.

  66. To Anon "October 8, 2011 3:06 PM"

    "The fact is - as 'M' suggested - I am giving them information that they possibly would have never gotten to by themselves"

    I was merely referring my own case (in the discussion with M about exit), I think Canadian banks are more than willing to give IRS their clients information upon IRS request with court order.

    Too bad, OVDI won't give you any credit for providing information that they will never have a chance to get on their own. That is not fair in my view. You are truly volunteer -- not like some of us -- volunteer in fear of being caught someday.

  67. To M,

    "This also explains why the US Govt thinks you are a criminal"

    For the record, I have no criminal record in US, and I feel no shame with this label by US Govt if it has no shame to take on taxpayers' retirement.

    What is the difference between thief and robber ?

  68. To ij and Anon:

    This is like the Bourne Identity movie:

    You don't know who you are.

    You look around and you are in an IRS building. There are many agents talking to people and looking through papers.

    You don't know who you are, how you got there or why you are there.

    On the door it says: "FTCCWUFACD"
    "Financial Tax-Cheating Criminals Who Use Foreign Accounts Confession Department".

    In your hands is a stack of foreign bank statements.

    You are waiting in a line.

    Who are you and what do you do?

  69. Anon @ October 8, 2011 3:06 PM
    May i know the ballpark tax due and FBAR penalty in your case?

  70. 'Most local Indian banks, for example, will simply refuse to do anything about a IRS court order.'

    That is almost certainly wrong. India has a TIEA with the US, so if the US requests information on US persons from a local Indian bank via the appropriate authorities in India, they will oblige per treaty.

  71. anon O@ctober 8, 2011 3:06 PM

    "Now lets looks at my own case. My bank accounts, for the most part, are in local Indian banks. Some accounts are from before I migrated to the US. Even the bank does not know that I am a US based customer because I didn't bother to get my address changed. IRS wouldn't have gotten to these accounts in 100 years. But here I am participating in the OVDI. Only because of ethical reasons. I could not live with the fact I was in non-compliance once I became aware of the laws."

    You should know, that under Indian law it is illegal for a non resident to hold a 'local' Indian account. And in fact, you are supposed to give Indian banks your current address when they request it for KYC purposes, which I believe they do every few years.

  72. To Anonymous re Indian bank accounts:

    There are several prerequisites though:

    1) IRS needs to know the name, address, bank name, city, bank account, etc. This is not likely unless one voluntarily discloses it.

    2) IRS needs to go through proper diplomatic channels. (Are there bribes involved? If so IRS is not allowed to pay them.)

    Time and effort consuming, for what purpose? If the money is already taxed in India, IRS is not entitled to it.

    3) From the articles linked here:

    "While the number of tax evasion cases are going up on the continuous pressure from the US authorities, there is complete silence from the Indian authorities.

    According to a senior banker, who requested anonymity, everyone knows that a lot of money coming into India from non-resident Indians (NRIs) or from persons of Indian origin (PIOs) may not be accounted for tax purposes in the country of origin. However, the moment the Indian government initiates any action in this matter, the remittances from NRIs and PIOs would drop dramatically. This may be one reason, why the country is not too keen on signing any international treaties on tax evasion, the banker said."

    "rampant corruption in the tax department and the pressure on bank managers to meet impossibly high targets will always offer plenty of opportunities to continue to maintain dubious tax-dodging accounts."

    "The domestic account is usually topped up with Indian cousins or relatives paying them locally for the purchase of the latest gaming gizmo, or a nifty iPad/iPhone before its Indian launch, etc. This ensures a nice supply of spending money in India during their holidays and family visits."

    This is why it is highly unlikely the IRS will get info on Indian immigrants from India unless the Indians themselves disclose it.

  73. anon October 10, 2011 9:21 AM
    Actually you are wrong about the KYC. In the KYC, if
    you are an NRI you will still give your local indian address against the local address and the US address against foreign address.

  74. To Anon October 10, 2011 9:21 AM :

    "Illegal" is a strong word for something that tens of thousands of Indians in the US are in violation of. I don't know of any Indian in the US (among the folks who have migrated to the US as adults) who don't have any resident accounts in India. You know as well as I do, that these things are barely enforced in India. So there isn't a whole lot of motivation for Indians to have all their pre-existing accounts converted to NRO.

    May be you are one of the rare ones. In which case - congratulations.

  75. '"Illegal" is a strong word for something that tens of thousands of Indians in the US are in violation of. I don't know of any Indian in the US (among the folks who have migrated to the US as adults) who don't have any resident accounts in India. You know as well as I do, that these things are barely enforced in India. So there isn't a whole lot of motivation for Indians to have all their pre-existing accounts converted to NRO.'

    The fact that something is not enforced doesn't make it legal. After all, the FBAR laws were barely enforced by the IRS until 2-2.5 years back, so maybe there wasn't "a whole lot of motivation" there too.

    About KYC, if you're asked to give your permanent address, then you should have given your US address (if you're permanently living there).

  76. "About KYC, if you're asked to give your permanent address, then you should have given your US address (if you're permanently living there)."

    Ah..the word "permanent". Where do temporary visa worker fall in that ? permanent for tax purposes while temporary for immigration. That's the reason I am in this mess.

  77. "Look is this an embarrassment for him? Yes. He said so himself. But it was an innocent mistake. It is a mistake that is commonly made for people who are working internationally or for international institutions. It has been corrected. He paid the penalties."

    Just thought I post this from our President about our treasury secretary. See how it is equally applicable to visa workers, immigrants and expats.

  78. the indian community and tax advocates should pressure shulman re our non knowledge of the fbar. now we are paying a heavy price, pain and expenses and penalties and health.

  79. To Anon@4:56 PM

    "Just thought I post this from our President about our treasury secretary. See how it is equally applicable to visa workers, immigrants and expats"

    Sad...very sad that the country has come to this.

    Here I am paying with my life savings...may even have to dip into my retirement account for breaking a law that was barely publicized or enforced just 2 years ago.

    And Mr Treasury Secretary (no less) gets to go scot-free with a slap on the wrist.

    On a slightly unrelated note - I was reading somewhere that the number of federal statutes in this country have exploded over the past decade or so. So much so that it is becoming nearly impossible for anybody to not break any federal law in their life time. There is a book "THREE FELONIES A DAY" about this. It also talks about how easy it has become for the Feds to overwhelm a defendent with all kind of charges and force him into a plea deal.

    America is well and truly on the path of becoming a POLICE STATE if it isn't one already.

  80. May I suggest that the 12,000 Migrants in OVDI organize themselves and hire some lawyers (from diverse backgrounds, and countries) and brainstorm a defense strategy.

    The stories seem to be the same, and they are innocent pawns in this battle between the IRS and Offshore Banking.

  81. What if someone has correctly filed the FBAR's
    but not included the income? In this case
    would just amending previous 3 years return be fine?

    I doubt if this would ever be the case but wanted know.

  82. One thing for sure is that all immigrants who entered the OVDI were duped. If someone had done a quiet disclosure with small amounts and no FBAR penalty was imposed then the OVDI program is a failure. In this case all should exit the OVDI program in solidarity. Then OVDI program will be an official failure then.

  83. You should organize yourselves.

    Global Organization of People of Indian Origin (GOPIO), National Federation of Indian American Association (NFIA), American Association of Physicians of Indian Origin (AAPI) and Asian American Hotel Owners Association (AAHOA) under the aegis of a National Coordinating Council.

    Like the ACA (American Citizens Abroad).

    Hire some public relation person, hire a legal team to advise. (Everyone pays in a membership fee of $100, and gets the guidance).

  84. M said... October 12, 2011 12:37 AM
    I like the idea.
    I think we have a reasonably good set of people watching this board. How about chipping in and
    seeing if we can hire Jack(provided he is willing
    to represent us). I have been following up with
    the GOPIO and they are trying to work with Senators, the treasury secretary and they have appealed to Obama.
    Jack willing, if we can have him represent us, how will we approach this issue?
    some thoughts
    We can approach it in two ways.
    a) Similar to GOPIO and other orgs write a petition to local congressmen as well as petition to others (treasury secretary, president). Also unlike GOPIO we will have the advantage of having people from different countries (atleast India and Canada)
    b)With Jacks help come up with a plan of attack for similar cases ie inherited money, RRSP, money sent tp help parents. I think a good majority would fall in one of these buckets and hence the legal issues may be similar for each bucket.

    Question is how best to organize?

  85. M,

    I have been lurking here in the background reading all these comments, and I strongly agree with you. The Indian immigrant, whether here on a temporary or permanent visa, is totally unrepresented and has no voice in this issue right now.

    It really kills me to see the US doing such harm with these VD policies that frankly are driving talent away, and leaving a bad taste in everyone’s mouths. Many are just talking back with their feet by walking down a jet way, I fear, and the US will never know what it lost in this so called crackdown.

    They need to get organized and have a forum, and I too have in the past recommended both the organizations you mention.

    I recently came across a women who has created a blog for Expats in Canada, and maybe that is a model some from India could create in the USA.

    Also, I noted here, how a civilized country handles Voluntary Disclosure process, as compared to the US.. Read how Canada handled it..

    Anyway, dear Indians, Chinese or whatever your nationality. Organize yourselves. M is absolutely right!!

    PS... btw, I live in NZ. When it was time for me to pay taxes in NZ on my US foreign earnings and bank accounts, the Tax Department (IRD) sent me a nice letter ahead of time to inform me of my obligation. I might not like it, but I did appreciate the outreach. What a novel concept!! Direct Communication to an immigrant for a coming obligation!! Not just a gotcha OVDI 25% penalty when you failed to dig up the obscure rules yourself on the FBAR. That is how a civilized Democracy handles its newly arrived Immigrants, rather than treating them all as criminals as the US does and then tries to extract maximum revenues for absolution. It is just wrong.

    Listen to M.... ORGANIZE! Someone needs to make this their passion, and stop being just the victims of this misguided OVDI program. Otherwise, you all are just fish fertilizer :)

  86. I will start by writing a letter to my senator about the OVDI. The aspect that most bothers me is not the penalty or the FBAR itself but how IRS advertised OVDI. I strongly disagree with the uniform penalty structure, which would have been better to be correlated with the tax underpayment, years involved, etc... There is a BIG lack of transparency in the FBAR penalty structure. What is a reasonable cause??? Why some people get 5000 in penalty and other get 10,000. Why do I have to pay 10,000 in penalty if I had 37$ in unreported interest, when there are so many other tax loopholes in the system that cause much more tax underpayment. In conclusion this FBAR penalty is way over blown given the tax loss to US government.

  87. 'One thing for sure is that all immigrants who entered the OVDI were duped'

    'All'? Does that include Dahake, Ahuja and a few others [whiel they could not have joined OVDI, they could have joined the OVDP program ..]

    It looks like buyer's remorse from joining OVDI has afflicted some people. Hodgen has some advice on this in his blog, which basically says "don't look back'. Look forward

  88. There is little hope that we can change OVDI 2011 as IRS would just say "if you don't like OVDI, opt out".

    However, there is a good moral ground to voice on certain issues inside OVDI such as

    1. Taking off all the offshore retirement plan from penalty base (not because I have RRSP -:)

    2. Visa workers (I mean non green card holders) should have same treatment as expat US citizens (like 5% penalty).

    Opt out will cause both IRS/taxpayers resource/time, and I think with such a small adjustment, it will be good for all.

  89. ij,
    what about US citizens who jointly own account with parents in India/Canada
    What about US citizens who have acquired assets and left it in India/Canada before moving to US.

    Since each case is unique for the most part, forming a group is becoming more difficult.

  90. To Anonnymous@October 12, 2011 12:27 PM

    Your logic is not sound.

    Most of us in OVDI are nothing like Ahuja, Dahake etc.

  91. Given the rigid rule inside OVDI, there is very little we can do -- and IRS has been in hardline position. They threaten participants with "opt out".

    Visa worker and retirement plans are good start point as these were not likely addressed in OVDP 2009.

    Joint accounts can be easily argued even inside OVDI -- what is % ownership ? Is this just a name only with no true ownership etc..

    I don't see any public sympathy (given the poor economy in US) towards those who have offshore assets while Americans are in foreclosure/short sale/Wall Street Protest.

    There is indeed strong moral ground to argue for retirement plan (hardly tax evasion problem)
    and visa workers (less equal right in US)

  92. We should address a broad issue (such as vsia workers, retirement plan) -- these will cover many innocent people.

    Then we need find our "Schindler", someone like Jack who can take this issue to TD/DOJ or higher courts.

    BTW, i am not visa worker -- but I would be a strong support on this issue.

  93. The IRS thinks that anyone who has an account abroad does so because he wants to evade taxes. The IRS is looking at US Citizens residing in the US only.

    It does not consider people who have accounts abroad because they live or have lived abroad.

    The punitive FBAR penalties are for the US Citizens evading taxes, not for migrants or expats.

    Someone needs to make this clear to the IRS and to the govt.

    Migrants and expats disclosing accounts abroad should not be penalized (even if the US Govt needs revenue).

    This also needs to be made clear to the IRS.


    If the IRS says, "well the OVDI program was not meant for you, opt-out and take your chances", then a second disclosure program should be set up for such cases, which may represent the majority of the OVDI filings.

  94. So lets take the following two examples of two immigrants:

    One learns he had to file FBAR and joins OVDI hoping that his FBAR penalty will be lower under OVDI. If he decides to opt out he will have an audit and will most probably fined some money in order to cover the audit costs.

    Another immigrant to US learns that he had to file FBARs. OVDI program is over. In no case he will do a VD because he is not concerned with criminal prosecution. He will most likely file FBARS with an explanation and let Detroit center decide his penalty if any.

    As anyone can see IRS acted misleading. They pushed regular taxpayers into OVDI, scared them with huge FBAR penalties outside OVDI with 10,000 per account per year. Clearly the two folks depicted above will be treated differently if first opted out and tried to argue no FBAR penalties and second just trying to argue with some explanation to Detroit Center. That is why OVDI is not fair to small immigrant taxpayers...

  95. Anonymous said...
    October 12, 2011 3:37 PM
    But in the above case immigrant1 is a chicken
    and coulndt sleep. Was irrantional and jumped in.
    more like me.
    immigrant 2 was more level headed, probably consulted a couple of attorney's about his civil and criminal liability and took a proper decision.

    A fool and his money will be parted soon.
    Immigrant 1 shoulnt have jumped in.

  96. Charlie Rangel headed the committee that writes the tax code. He had undisclosed income from rental properties in Central America. He should have had accounts there to collect rents and administer the properties. I think he filed amended returns but to my knowledge no FBAR or other penalties. This is another sign of the corruption and unfairness of our government. Hell, a bunch of Obama’s people had tax issues. Why do they get a break and the common folks get the shaft. We are a broken nation.

  97. 'Your logic is not sound.

    Most of us in OVDI are nothing like Ahuja, Dahake etc. '

    No, my logic is sound because the OP said that 'ALL immigrants who entered the OVDI were duped'. he didn't say many, most, or even almost all. He said ALL, and logically, all that is needed to disprove ALL is a single counterexample. Like I said, buyer's remorse, which is worse than useless at this stage.

    'One learns he had to file FBAR and joins OVDI hoping that his FBAR penalty will be lower under OVDI. If he decides to opt out he will have an audit and will most probably fined some money in order to cover the audit costs.'

    One can't be fined to cover audit costs. Otherwise the IRS would audit pretty much everyone they could. The IRS may well decide that its not worth auditing some cases (indeed many cases) where the individual has primarily wage income and no other obvious red flags on the amended returns.

    'As anyone can see IRS acted misleading. They pushed regular taxpayers into OVDI, scared them with huge FBAR penalties outside OVDI with 10,000 per account per year.'

    So you would be happier if the IRS started penalizing people who did quiet disclosure with 10K per year penalties ?

    There seems to be too much buyer's remorse here and it seems to be futile and rather self defeating. Your focus should be on opt out or any other method to reduce penalties, rather than bemoaning the past.

  98. There are two combined strategies here. But I think this is the most likely approach to work:

    1- Have an American lawyer (Jack or Hodgen for example) be an advocate and try to work the political angle, cooperating, working within the laws, etc.

    IRS gets some taxes, now and in the future.
    Taxpayers pays a reasonable amount.

    2- Have an International lawyer (or firm) cover the worst case scenario - no cooperation, no payment, just leave the US or its jurisdiction.
    (An American lawyer can get in professional trouble with the govt if it plays this role, so you'd need an international negotiator.)

    IRS gets no taxes, now or in the future.
    Taxpayer pays no money but has to alter life.


    The reason for this dual approach is that the IRS can be short-sighted and thick-headed when it comes to arguments that you don't owe anything or very little.

    So like a dumb bull, it needs to be shown the alternative, the stronger force of no taxes whatsoever, for it to move.

  99. Hey guys....

    New story out tonight on Bloomberg, and it comes with the Reporters Email addresses. It is a story on the prosecutions that have been done, but it gave me an opening to ask some questions. I have already sent them off an email message, basically saying they are missing the Bigger story, and described some of the impacts on you (us), the unintended target of the IRS offshore tax crackdown.

    Here is the link to the story...

    and here are the Reporter and Editor email addresses... Reporter Editor

    So, may I encourage you to also send some emails with your situation, and ask them to dig deeper and report on the story of the Minnows caught in this trap... The more they get, the better!

    Below is one paragraph from the email and shows where I placed emphasis...

    I wrote:
    I would ask you this: Of those 30,000 who you report avoided prosecution by entering into the IRS limited amnesty program, are you implying that they are all in the same category as those names you published in your list? That is what this seems to say....

    "The IRS has said 30,000 U.S. taxpayers with offshore accounts avoided prosecution since 2009 by entering a limited amnesty program, paying back taxes and saying who helped them hide their accounts from authorities."

    If this is what you are implying, I hate to tell you this, but you are sadly mistaken and misleading your readers.

    Do you really know the make of those 30,000, or are you just accepting IRS assertions without any actual investigation? Who are they? Did you think to ask that question when you did your story? Or, would that require some discovery that might lead to an answer that does not fit the IRS narrative....??

    End of comments.

    I then provided links to stories of Expats in Canada caught up in this mess, and links to American Citizens abroad FBAR SCAM. I also expressed my concern on the negative impacts on US immigrants, here on both permanent and temporary visas and provided one immigrant story of OVDI anguish taken from comments posted on these blogs

    Finally, I ended like this...

    So could I ask that you Dig Deeper PLEASE? .....and if you want a list of questions that an inquiring journalist would want to know, I can certainly supply you with many... Here, try these for a start!! (that was a link in the email) Read the first comment. If you can get an answer to those questions, you might really break a BIG story of unintended consequences and IRS abuse. And, you would be the ONLY US of A reporter doing it. A first and an exclusive story!!

    Thank you.

  100. Just me, thanks for speaking out..

    It is so pathetic they even brag OVDI/OVDP about 30,000 avoiding prosecution.

    How about other 300,000 (if we represent 10% -- that is a very high estimate based on my circle), are they going to catch/prosecute them all ?

    I don't see a moral ground to prosecute expat US citizens who simply miss some forms, and new immigrants who owe no/little tax.

    What is a REAL tax cheat ? That has to be certain amount tax.

    I am sure they will brag how much money they can rip off from those 30,000 --- misleading the public as tax due (while FBAR penalty is 10 times more than the tax itself)

  101. M, surely its sufficient for someone who is not a financial professional who has a foreign account to say that they are not a financial professional, and hence 'its ridiculous' to subject them to any penalties, as you said earlier ?

    And, just wondering, do you consider India to be onshore, offshore, between shores, underwater ? I'm really interested in your unique insight on these definitional issues.

  102. N October 13, 2011 7:46 AM ,
    for now you can consider india to be offshore.
    with a good chunk of the participants this time possibly from India, past ovdi, india will be under water. unfortunately i am also one of those participants.

  103. All reading here...

    I did receive a reply back from my Bloomberg email last night, and I followed it up with another email narrative that has come full circle, with the IRS trying to impose unilateral requirements on US banks to report non resident interest income back to foreign governments ala an onshore US bank equivalent of FATCA. That, ironically, as I have posted previously, has initiated responses from Congress for the IRS to cease and desist.

    Here is that story...

    In my second email to Bloomberg, I concluded with this...

    "In Summary…. I really would encourage you or Bloomberg to investigate the "so called" successes of the IRS VD programs and FATCA legislation that has been birthed out of these Offshore Tax Haven crack down efforts.

    The amnesty VD programs are causing serious collateral damage, and having very negative consequences for a lot of middle class immigrants and expats. It is my contention, that it is not accomplishing a FBAR compliance objective in any statistically significant manner. That is important to note, as this is the instrument the IRS is using as the bludgeoning tool of choice for non compilers. It is how they are able to apply draconian penalties for failure to file. It is core to the so called amnesty program, and the revenue collection efforts. Everything is built around this one administrative form.

    Additionally, when it comes to FATCA, any reasonable analysis sees that it adds a lot regulatory uncertainty, with possible Systemic Risk in addition to huge additional cost burdens in an already shaky world wide financial system. Someone in the US press needs to be pointing all this out, or at least asking some questions."

    Anyway guys, that is what I have done so far in the past 12 hours, and of course, it comes with little reward and not much hope of success, but I plod on! You never know.

    Good wishes to all of you struggling with the OVDI. Please consider sending your own emails and letters. It can not hurt. You have nothing to lose, as you are already up to your necks in this OVDI quicksand muck, so might has well stir some attention by flailing away publically. By remaining silent you assure that no rescue rope will ever be thrown your way, and you will sink below the surface with your cries for help never heard onshore.


  104. thank you fo your experiences, makes me feel relate to my depression, etc.
    I never knew this fbar and now i have to pay 50% of my inheritance to usa govt. it stinks to stay in this country, a police state.The Indians are afraid to fight this irs/fbar discrepancy. They have such big organizations but are afraid. Maybe arvind ahuja's trial will awaken them.

  105. Similar to action being taken against Swiss bankers, should USA take action against Govt of India.
    Since Govt of India allowed for liberalized NRI investments, lots of indians moved their after tax money to india. Most of those would have deposited their money in their name or in joint account with family. So there was no intent to hide or evade. The interest income out of the deposits not reported must be miniscule compared to the income earned and reported in US.
    Given good relations between US and India, shouldnt the govt of india intervene and work on a possible mitigation guideline/penalty.
    Heck if other congress men like Charlie Rangel who write the tax code can get away without paying the FBAR penalty, why should i who pay for salaries of these congressmen as a taxpayer
    be held to a different standard.

    Has anyone tried to talk to Meera shankar the
    Indian Ambassador about this? Maybe she herself
    could be having an FBAR issue.

  106. "Has anyone tried to talk to Meera shankar the
    Indian Ambassador about this? Maybe she herself
    could be having an FBAR issue."

    Certain US taxpayers are exempt FBAR requirement such as US diplomats, military etc..

    I am not sure if a foreign diplomat is considered US person at all.

  107. 'Maybe arvind ahuja's trial will awaken them. "

    I don't believe Arvind Ahuja makes a good poster child for immigrants objecting to FBAR penalties. Unless you believe that Dr. Ahuja didn't remember $1M + of interest income (despite apparently being involved enough to ask his bankers for the highest interest rates possible) on his returns.

  108. Just Me - I am going to send Bloomberg an email. I dont have a problem with OVDI but being tagged as a "tax cheat" for a reporting requirement that was not well publicized is too harsh a characterization. I will let you know what I hear. I presume not too many OVDI 2011 participants will send an email but i would encourage them to do so even if its anonymous - its not a question of getting relief from penalties its more a question of how the program is being perceived by the journalists who are blinded by these dogmatic press releases.

  109. "Heck if other congress men like Charlie Rangel who write the tax code can get away without paying the FBAR penalty..."

    Charles Rangel is also the author of the "exit tax". He's an odious and contemptible waste of oxygen.

  110. To: N

    Let's put our egos aside and work towards a solution. What are your ideas?

  111. M said...
    I agree with M. Let us not roll on self pity, blame

    How can we connect?
    What would be a possible action plan with a possible

  112. Let these indian organizations contact the ambassadors, politicians re excessive fbar penalties. Indians contribute a lot to their elections. It is about time to be paid by these corrupt greedy politicians.

  113. On the subject of corrupt greedy politicians, each party has their share, but I think the time may be ripe for a press on the Republican greedy politicians because of the confluence of timely phenomena: (1) many of the real big-time tax evaders tend to be of the Republican persuasion (the theological mantra of I am rich and bigtime because I -- that is a big I -- deserve to be rich and earned it all myself and I should not have to contributed to civilized society because I am a "job creator" and hence can hide money offshore because, in the end, if I didn't it would just encourage parasites; hence, evasion of unjust taxes is my duty to the world) and so forth. But, since the Republicans can't do anything except block action, you will have to enlist some corrupt greedy democrats so that affirmative action can occur.

    The problem is that for anything to happen it has to be in the benefit of the rich but appear in the clothing that Congress is really helping all of those who have been mistreated by the IRS OVDP and OVDI programs. You just have to find some way that your efforts will help the superrich and then you may get the attention of these scumsuckers who are in the pocket of the superrich.

    But just pleading that the minnows are getting screwed is not the issue. It should be but it is not. Get focused on some benefit for the superrich and you will find that Congress will fall in line and you can get some relief (but only if the superrich get more relief; that is just the cost you pay for relief).

  114. to connect we can setup a email id such as Those interested in forming
    a group and coming up with a plan of action
    can then send their contact info to
    and we can plan on contacting over phone and forming a team. If others have a better idea, i am ready to hear and follow.
    As M said let us see if we can get something constructively achieved.

  115. talk about spreading the wealth around, it couldn't have been any better. We are all F$$$ed By Arbitrary Rules

  116. Jack, Just me, M, ij and all,

    Came across the information below on IRS website.
    Link below. Supposedly meant for tax professionals.

    Do you think 12,000 (and more) opinions will count? Emailed on same day?

    Jack your thoughts please.


    IRS Civil Penalties Virtual Mailbox

    "Shaping the Future of Civil Penalties"

    The Internal Revenue Service is committed to ensuring civil penalties are imposed in a fair, consistent and efficient manner. This includes application of penalties that are comprehensible and effective in promoting voluntary compliance.

    We invite you to share your comments regarding ways to improve the Civil Penalties Program. Specifically, we are requesting your assistance in determining barriers and soliciting recommendations for an enhanced penalty strategy that achieves the following desired states:

    Penalty Consistency –IRS applies appropriate penalties to taxpayer actions and circumstances in a fair and uniform manner
    Penalty Comprehensibility –IRS and taxpayers demonstrate an understanding of taxpayer reporting, filing, and payment obligations as it relates to civil penalties
    Penalty Effectiveness - IRS applies and abates penalties in a manner that positively affects future reporting, filing, and payment compliance
    Penalty Efficiency –IRS administers penalties promptly and accurately, so not to impede timely processing of case resolution
    Your recommendations will be used to address weaknesses in the current program and design a uniform approach to penalty administration.

    Please provide your comments to the following questions. Do not include any information regarding specific taxpayer cases.

    Question #1: What are the factors that influence an effective Penalty Program? (i.e., "What are we already doing well?")

    Question #2: What are the barriers to an effective Penalty Program?

    Please submit your comments to: .

  117. I think that we should, at a minimum, be targeting Congressman Charles Boustany, Jr., MD., Chairman, Subcommittee on Oversight.

    Here is his web site...

    Washington, DC Office
    1431 Longworth House Office Bldg
    Washington, DC 20515-1807
    Phone: (202) 225-2031
    Fax: (202) 225-5724

    He is already on record in strong opposition to IRS actions requiring US Banks to report interest earned by Non Residents back to foreign governments. He obviously is responding to lobby pressure from US Banks, and so he probably would be in sympathy with anything that the IRS is doing that is seen to be egregious. Additionally, with the election coming on, it provides a political opening to hammer the Obama Administration, and as a Republican, he wouldn't be able to pass up the partisan opportunity. Why don't we all write him??

  118. Hi Jack

    I am on an H1B for the last 10 years in the U.S. I had NRE fixed deposits in India in SBI and did not know that NRE interest which is income tax free is taxable in the U.S. I sent out an extension request on the 7th of September. I am not sure if I did the right thing by joining OVDI. My FBAR penalty could be close to 50K and I am looking at tax and penalty of about 16K.

    I am ok with the tax and penalty because it was a mistake on my part but the FBAR penalty is horrendous given I have close to 200K in my account.
    I am only on a Working Visa, the money in my NRE Account was never withdrawn and the idea was to save money for retirement in India.

    Would I stand any chance of getting my FBAR penalty reduced in the event that I opt out ?

  119. Supreme court justice clarence williams did not disclose $700k income, charles rangel, geithner got away with fbar. birkfield who is in prison should be subponaed to release the politicians names who had ubs accounts. maybe he will write a book when he gets out and will name names.why we are the only ones paying a heavy price.

  120. To Anonymous October 13, 2011 10:40 PM

    The issue of whether to opt out is a lot more nuanced than just consideration of the facts you present. I recommend that you engage a professional to help you make that judgment call. And, of course, you should put off making the decision until you are formally presented the option to opt out. By then, there may be sufficient anecdotal evidence as to what is happening to opt outs whose cases have gone through audits. You can make a better informed decision then. But, I do think you could benefit from an experienced practitioner who can develop all of the facts that may bear upon the decision.


    Jack Townsend

  121. Just Me said...
    I called up Mr Boustany's office and the receptionist did mention that their are staffers
    for scheduling appointments with him after initial vetting.

    The best way to communicate is to write to him.

  122. To Anonymous October 13, 2011 10:40 PM

    As someone who went through the 2009 OVDP, I just want to second that comment from Jack. He is absolutely right!! I did the entire process myself, but... I paid for key decision point advice, which was very helpful. I think it was value well spent, without adding significant cost to the entire process.

    Jack has a list of OVDI attorneys who are knowledgeable. When the time comes, I could contact one of them. Given the pace of how the IRS handled the OVDP examinations, I would bet you are still 6 months or more away from having to make an Opt Out decision.

    In the meantime, read past blog threads here. You are on the best blog on the internet when it comes to OVDI knowledge. At a minimum, I really recommend you go through all the archived posts in order, in the August and September time frame even if the topic does not seem germane to your needs. Sometimes the comments do stray off course a bit, but there maybe valuable information there.

    If you did that, you would receive a very good education which would make your conversations and time with a professional more valuable and succinct. You would be paying less for basic IRS rules, regs and process education, and more for the actual advice you need. Self help is important, but it doesn't replace good professional council.

  123. Good for you!! My letter is in process..

    btw, here is a new piece from yesterday on the perils of FATCA, which I will probably use, as it is fairly succinct.

    I do have others that have more in depth analysis, but this is pretty good.

    I do see FATCA as part and parcel of the entire VD process, I try to hammer the theme that current Tax evasion efforts are off the rails, with lots of very negative consequences and a lot of cost and systemic risk to the entire Financial industry going forward. I try to tie everything together...

    Intentions good… Clamp down on evasion. Results bad, as the unintended consequences outweigh the benefits.

    Justice Department UBS prosecution lead to...
    IRS OVDP... led to
    FATCA.....led to
    IRS OVDI.... led to
    IRS USBATCA regulations (my acronym)..Lead to
    Boustany's letter

    Now, what will that lead to..?

  124. To Anon.. October 13, 2011 10:40 PM

    Just a follow on. I would also read all the July threads. Some good information there too...

    So repeat, read all July, August and September comments in order, and where people reference IRM sections or other articles. Read them too. It might take you a few days, but it would be very beneficial for you. And if you have already done this, then just ignore me! LOL

    If you do that, you will have a good basis of understanding that would make your time with a OVDI Professional Practitioner much more valuable.


  125. To Anon...October 13, 2011 8:53 PM

    Thanks for that link and suggestion. I don't know about the other 30,000 that were in the OVDI and OVDP, I will definitely put a comment here. I am sure it will has a much impact as my comments on the new form, 8938... But again, nothing ventured, nothing gained.

    BTW, have you looked at this, and commented?

    All should be posting comments on this too...

    Here is what ACA has to say about it if you need some help framing a response.

  126. I am thinking of an audit risk insurance idea for opt-outs.

    Let's say there are 10 immigrants each with $100K in assets, for a total of $1 mil.

    If they stay in the program, they pay 25%, $25,000 each or $250,000 in total.

    Now let's say they all opt-out. What is the chance of being audited, and what is the financial risk? Let's say 30% are audited:

    1 immigrant is charged 10% = $10,000
    1 immigrant is charged 20% = $20,000
    1 immigrant is charged 30% = $30,000

    This equals only 4% of the $ 1 million

    So if the immigrants each pay 4% into an insurance fund, that would cover those that would be audited.

    It eliminates the unknown factor, which is the primary fear that I am reading here, and gives them a reasonable amount that they can afford to pay.

    If you use a professional international insurance company like Lloyds of London for example, they would charge a fee for administering it, but they would also provide the lawyers to minimize audit loss, since it is on them, after the premium is paid.

    The problem is getting some actuarial statistics about happens in OVDI and in the opt-out situation.

    In this case I would send out 10 random immigrants to opt-out and see what happens to them, to test the result.

  127. 'In this case I would send out 10 random immigrants to opt-out and see what happens to them, to test the result. '

    But who will bell the cat, or rather the IRS ?

  128. "But who will bell the cat, or rather the IRS ? "

    When on the wrong side of the law, only possible mercy from the cat(IRS) is a wishful thinking..

    Again, we do need a deep thinking of all the laws that can be applied to citizens/residents.

    when the law (such as FBAR) was written/passed by the congress, could they have perceived such a broad application ?


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