From a correspondent I received a link to an article from the Indian news media.
The Times of India has a story on a recent visit to the IRS by members of the Indian community about the current FBAR enforcement efforts. Briefly, a group went to meet with an IRS employee or two and tell the stories that I have heard so, so many times.
The key paragraph for all of you out there:
The IRS responded that for those who believe themselves to be innocent of violation have the choice of opting out of OVDI but they would still have to make full disclosure under the August 31 2011 amnesty program. That would expose them to scrutiny but if their case was genuine, (for example the delegation pointed out to the IRS officials that if the interest income during the process of supporting children/siblings education and of buying a retirement home is small amount compared to the estimated penalty), they may escape penalty or pay a much smaller percentage of penalty. In the simpler cases of non-disclosure, the tax payer can represent themselves to the agent after filing all amended statements during the opt-out procedure. [Emphasis added by me].
If I had been drinking chocolate milk while I was reading that I would have snorted it out of my nose with derisive laughter. That’s not the IRS I know and love. The IRS I deal with throws $100,000 penalties at people with $4,000 of unreported income (thus maybe $1,000 of tax) over eight years.
The phrase to play through your head when reading stuff like this is: “Bullshit or jellybeans?” You have to be able to tell the difference.
The IRS track record in the 2009 Voluntary Disclosure Program is abysmal. There is no discretion given for judgment calls such described above. This is a statement by an IRS official who is lives on a different planet from the rest of us. Innocent and ordinary taxpayers were loaded on the tumbrel and trundled off to the guillotine with alacrity and enthusiasm by the IRS.
This is lazy reporting by the Times of India (c’mon, journalists! Ask the hard questions!) and Orwellian doubletalk (at best) by the person who made these statements.
Of course, the IRS official could also think that a “smaller” penalty is defined at $140,000 against a $1,000 tax liability and is a really “good deal for the taxpayer”, as one Revenue Agent (playing Good Cop/Bad Cop) has snarled at me.