Wednesday, December 7, 2011

For Taxpayers and Practitioners Who Cannot Make the 12/8/11 OVDI Deadline (12/7/11)

Most readers of this blog know that there is a 12/8/11 deadline for submissions of the OVDI 2011 package if an extension was requested.  The question is what to do if you can't submit a complete package by that date?  There seems to be a lot of concern among taxpayers and practitioners that taxpayers might be kicked out of OVDI 2011 if the package is not submitted in substantially complete form.  (Whether being kicked out is such a bad thing is something concerned taxpayers should discuss with their practitioners; that is a fact intensive inquiry that I can't address here, other than to identify the issue.)

The purpose of today's blog entry is to offer to readers of this blog only some anecdotal indications of what to do if a reasonably complete package cannot be posted by tomorrow.  Readers must understand that these are only anecdotal indications of what to do and in no way binds the IRS.

First, and probably the most direct way to get some indication from the IRS is to call the OVDI Hotline or some other person associated with the process.  At the recommendation of a fellow practitioner, I yesterday called Carl Barkow, OVDI Supervisor in Austin (512) 460-8953.  Basically, he said that, in the event that despite due diligence, the taxpayer is unable to submit a reasonably complete package, the taxpayer should  submit whatever he or she could submit, along with a cover letter explaining why the package is not reasonably complete and then submit the other items no later than 12/31/11.  I gave him my name, but I don't think he recorded it, and he did say that he was getting a number of calls on this and was giving this advice / suggestion.  So, I think this advice was intended to be generic and not specific to me or my client.

Second, I understand that some taxpayers and practitioners are doing essentially the same thing without a predicate call to the OVDI Hotline or the Austin office.  Perhaps they have heard that this advice is what the IRS gives routinely, so that there is no need to call.

So, it looks like there is a way to get an additional 23 days.  The problem some will encounter is getting things done during this particular 23 days of the year when there are substantial demands on their time, including both work and holidays.  From my perspective, then, that is really not a 23 day extension but something considerably less than that.  And, if documents need to be gathered from some foreign financial institutions who, for any reason, do not respond promptly, it may just not happen by 12/31/11.

Reading between the lines (this is my read and certainly not binding on anybody), I think if I were to get to 12/30 or 12/31/11 with out incomplete information and I have a reasonable story to tell about diligence on the practitioner's and/or  taxpayer's part, I would send in what I could with a cover letter expressing great angst and committing to move promptly to fix the deficiencies.

The truth is that it will likely take the IRS months to turn to the 12/8/11 and later submissions, so that supplementing before that happens will likely not result in being kicked out of the program (only my speculation).  And, the IRS should really appreciate this process because it is getting low hanging  fruit with the IRS limiting the resources it must devote to picking that low hanging fruit.

But, keep in mind most of this is speculation based on anecdotal evidence as indicated.  The better part of wisdom would be to crash and submit a reasonably complete package by 12/8/11 and then supplementing as necessary and as soon as possible.  (There is a fuzzy dividing line between what is a reasonably complete package that might require some  supplementing and one that is not reasonably complete that requires major supplementing; I can't locate that line in words but think I know it when I see it in a particular set of facts.)

Addendum 12/7/11 5:25pm CST:  I have corrected the wrong telephone number for Carl Barkow.  The correct number is now in the text and is (512) 460-8953.  Sorry about that.


  1. Jack: I tried calling (512)460-7325 several times and all I got was the fax machine sound. Was there a misprint in the number for Mr. Barkow? Thank you.

  2. We are faced with this situation for a number of OVDI clients. I think it will come down to good faith attempts to comply on time. I would submit as much possible by Dec 8. For what is missing, can the taxpayer provide documentation of his/her attempts to comply? For instance, a record of correspondence to the foreign financial institution requesting the account records. If the taxpayer can show multiple attempts to get the documentation, and these attempts date back months (not on the eve of the deadline), then the taxpayer may demonstrate reasonable efforts to comply. Also, if the taxpayer can make an advance payment of his tax liability by December 8, then that would show good faith.

  3. One person noted that the telephone number for Carl Barkow of Austin OVDI was incorrect. It indeed was. I have corrected the text. The number is is (512) 460-8953.

  4. All,
    I am in OVDI and ready to submit the package. I have a question on 2010 return. My 2010 return is on an extension thro Dec 15 as I live overseas and I am tax compliant for 2010. Our attorney is saying to file the 2010 return along with OVDI package.
    I am wondering if we file 2010 return with the package, how long will it take for it to be assessed and is this the way to go? Or, should we file the 2010 return separately (under standard practice of filing extended returns at NC service center), and also send a copy with OVDI package. I just want to make sure my 2010 return is not judged to be delinquent because it may take several months for an OVDI examiner to be assigned my case.

    Will really appreciate any advice.

  5. Re Anonymous December 8, 2011 7:12 AM

    Hi I was also tax "compliant" for 2010 and filed the return electronically the regular way.

    I sent a copy of the 2010 return with the OVDI package. This was based on advice from my tax attorney and OVDI hotline. In fact, my tax attorney told me that there was no need to send the 2010 tax return as part of OVDI package. I did so in any case.

  6. The recording on the Hotline says that packages must be submitted by December 9.

  7. I would file through the IRS service center and send a copy with your OVDI to be on the safe side.

  8. To Roy Berg at 12/8/11 10:30 am:

    As I understand it the IRS has given out inconsistent answers on this and perhaps have now resolved the inconsistency for the later date. In any event, I don't they they will footfault 12/9 submissions. (Really doubt that they would footfault later submissions with some reasonable explanation and/or groveling, but only the IRS can make that determinations.)

    Jack Townsend

  9. Thanks all for the advice. I have filed my 2010 return to the NC service center and a copy was submitted with the package yesterday. This blog is god sent - Jack thanks for hosting it and doing such a big public service. I realize, how precious time is - so really appreciate the effort. I had small foot fault but decided to do the right things. My taxes, penalty and in-lieu penalty is just under 10 thousand, but attorney and accountant fee will add up to a higher #.

    Also, I am glad to see that IRS is waking up to the collateral damage of OVDI. If I was living in US, and had missed reporting the income, all I would have paid was less than half the amount of the check I wrote.

    Wish commissioner Shulman gets an expat assignment, misses out reporting small amounts and can then relate to what we are going through.


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