August 4, 2011
Mr. Inder Singh
P.O. Box 560117
New York, NY 11356
Dear Mr. Singh:
I am responding to your letter to Secretary Geithner dated June 27, 2011. You asked about relief available to certain taxpayers under the 2011 Offshore Voluntary Disclosure Initiative (OVDI). Thank you for your interest in the OVDI.
The OVDI provides a way for taxpayers with undeclared assets offshore to resolve their tax problems. The terms of the OVDI require taxpayers to pay the following penalties:
1.A 20 percent accuracy-related penalty under section 6662 of the Internal Revenue Code (Code);
2.A failure-to-file penalty under section 6651(a)(1) of the Code;
3.A failure-to-pay penalty under section 6651 (a)(2) of the Code; and
4.An offshore penalty equal to 25 percent of the highest aggregate balance in foreign bank accounts and entities or the value of foreign assets during the period covered by the voluntary disclosure in lieu of all other penalties that may apply, including FBAR and offshore-related information return penalties.
The OVDI terms already lower the offshore penalty down to 12.5 percent or 5 percent in some circumstances. Further, under no circumstances will a taxpayer have to pay a penalty greater than what he or she would otherwise be liable for under the maximum penalties imposed under existing statutes. If the offshore penalty is unacceptable to a taxpayer, he or she may opt out of the OVDI and request that we refer the case for an examination of all relevant years and issues.
You also asked that we extend the August 31, 2011, OVDI deadline to December 31, 2011. At this time, we do not contemplate granting an across-the-board deadline extension for all taxpayers. However, a specific taxpayer can request an extension of the deadline (up to 90 days) to complete his or her submission if the taxpayer can demonstrate a good faith attempt to fully comply with the OVDI requirements on or before August 31,2011. The request must be in writing and must include a statement of the items that are missing, the reasons why, and the steps he or she is taking to secure them.
You also asked that the U.S. Government publicize the OVDI in ethnic newspapers and other community media in multiple languages and that IRS representatives promote awareness of the OVDI in the media. We have promoted OVDI awareness by posting information about the OVDI in eight foreign languages, including Hindi, on irs.gov. We have also released information through traditional media, both national and local, as well as social media websites such as Twitter. We will continue this extensive outreach effort as the August 31, 2011, deadline nears.
Again, thank you for your interest in the OVDI. If you have any questions, please contact Rosemary Sereti, Identification Number 10-00120467, at (212) 719-6258 .
Heather C. Maloy
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