Register your protest with White House on Tax Rules on Foreign Bank Accounts
Posted by vicharak1
|This is crucial information for all NRIs in the USA. You need to act before August 31, 2011Blog Moderator|
Major Indian American civic and professional organizations in the United States with a substantial membership have joined together to campaign with the US administration seeking relief on penalties stipulated by US tax rules on foreign bank accounts. Following a letter from GOPIO delivered on June 27, 2011 to Mr. Timothy Geithner, Secretary of the US Department of Treasury, representatives of four major Indian American community groups; the 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, sent a letter on July 19, 2011 to US President Barak Obama seeking his assistance in this matter of urgent concern particularly to the new US immigrants of Indian origin who are facing unfair and unprecedented penalties for failure to disclose and do tax filing of foreign bank accounts by August 31, 2011. Copies of the letter were also sent to Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner.
The joint letter affirmed the community’s recognition of the necessity for the IRS to take needed actions and enact rules to track money flowing to terrorists, drug transaction and money laundering in safe havens outside the United States. The groups have requested that the IRS review and reconsider the rules towards more practical and prudent application.
The United States Internal Revenue Service (IRS) announced on February 8, 2011 a special voluntary disclosure initiative (Ref IRS News Bulletin IR-2011-14, Feb. 8, 2011) designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through August 31, 2011.
“The IRS decision to open a second special disclosure initiative follows continuing interest from taxpayers with foreign accounts. The first special voluntary disclosure program closed with 15,000 voluntary disclosures on Oct. 15, 2009. Since that time, more than 3,000 taxpayers have come forward to the IRS with bank accounts from around the world. These taxpayers will also be eligible to take advantage of the special provisions of the new initiative”.
“For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties of 2 percent”. (Ref IRS News Bulletin IR-2011-14, Feb. 8, 2011).
While the United States has a rapidly increasing population of Indians and persons of Indian origin who are contributing significantly in all areas of the US economy and society, many in the Indian American community were not aware of the first voluntary disclosure program which ended in 2009. The Indian American media also was not aware of 2009 voluntary disclosure program. Many people holding foreign bank accounts were unaware of these rules simply because these rules were never publicized by the IRS to the general public. Even most accountants preparing and filing the annual individual tax returns did not inform or alert their clients about this requirement. It also appears that certain communities have been singled out for investigation which is highly damaging to the multi-ethnic ethos of our country.
The appeal is for universal application of the law on an equitable basis, on the principle of fairness and in good conscience without undue burden to the US taxpayer. The request further stated that strict application of compliance with the law on hard working Americans who are not aware of the law can lead to undue and irreparable distress, as well as unforeseeable consequences for a large number of innocent citizens who did not consciously or knowingly violate the rules.
The letter further states that the community is becoming aware of the new regulations on foreign accounts and is in full agreement that all citizens must be in compliance and pay all taxes due to the US government.
The Indian community in the USA, by and large, consists of very progressive, hard working and law abiding citizens who do not deliberately or intentionally violate any US laws or IRS rules governing taxes due. In many cases, people had transferred money to have a retirement income or home in the foreign country, or to provide support for extended family in the foreign countries. There was no deliberate intent to avoid taxes on interest earned during the process of acquiring homes or supporting family or saving for children’s education. It was not planned to be unjustifiable enrichment.
Now that the groups have become aware of this IRS initiative, the impending deadlines, and potential consequences, they have offered to use their networks to inform and urge full compliance. However, the groups have requested that the remedies fully described in the July 19, 2011 letter to President Obama be considered and enacted. These include:
The joint letter was sent by GOPIO Chairman Inder Singh, NFIA President Lal K. Motwani, AAPI President Dr. Sunita Kanumuri and AAHOA Chairman Hemant D. Patel. Since sending out the letter, Federation of Indian Community associations of Cleveland (FICA) and Federation of Indian American Associations (NY, NJ and CT) have joined the effort along with Lueva Patidar Samaj. The groups are reaching out to all Indian community groups to join this effort.
For more information and participation in this national campaign, please contact the respective signatory organizations shown below:
Global Organization of People of Indian Origin
GOPIO International, New York, NY
Contact: Inder Singh, Chairman
Tel: 1-818 708-3885, E-mail: email@example.com
National Federation of Indian American Associations (NFIA), Bellrose, NY
Contact: Lal K. Motwani, President
Tel: 1-646 724-1153, E-Mail: firstname.lastname@example.org
American Association of Physicians of Indian Origin (AAPI), Oak Brook, IL
Contact: Sunita Kanumury, MD, President
Tel: 1-630 990-2277, E-mail: email@example.com
Asian American Hotel Owners Association (AAHOA), Atlanta, GA
Contact: Hemant D. Patel, Chairman &
Fred Schwartz, President
Tel: 1-404 816-5759, E-mail: firstname.lastname@example.org
COMMUNITY GROUPS APPEAL TO THE LARGER INDIAN COMMUNITY
The coordination group has appealed to the Indian American community to post note to the White House at http://www.whitehouse.gov/contact or write to your Congressman and Senators. The groups have posted their appeal to the community for action as follows:
Making Arguments on the Community Cause
The Indian community in the USA, are widely regarded as law abiding model citizens. They are also first generation immigrants, as such almost all have close ties back in India and family obligations- helping family youngsters to educate, taking care of parents and extended family, building retirement home, etc. This reality needs to be considered in any application of rules and laws. Indeed the US immigration laws allow for dependents and parents to immigrate precisely for that reason so there is precedent in American Law that is cognizant of the particular history of the new immigrants. This kind of connection is natural for new immigrants who unlike third generation immigrants, will have active financial obligations towards families. What is required is for the IRS to help new immigrants make that generational transition both smooth and effective.
The second fact is that most Indians are unaware of these rules governing foreign account disclosure which has been very poorly publicized by the IRS. Indeed our spot survey suggests that close to 95 % are unaware of the amnesty and disclosure laws. And others believe that because they are paying taxes in India they are in compliance of the rules. A large majority are not therefore trying to avoid taxes on interest earned while acquiring homes or supporting family or saving for financing children’s education. And if they have invested in India then they are simply following what the free market dictates.
A more discrete IRS approach combined with wider reach into the new immigrant community will in fact lead to far greater compliance under the disclosure scheme. The current penalties take away savings , retirement incomes in case of a large number of new immigrants and thereby discourage compliance. That surely does not serve any purpose. Making citizens poor and their retirement years uncertain will in the long run impose greater burden on US entitlement system.
We would also like to stress that the current penalties of 25 percent for non-disclosure is totally disproportionate in relation to the presumed violation of tax laws. After all laws need to be just and proportionate to the supposed wrong doing. The disclosure scheme invites no hearing, no consideration for special circumstances that might diminish penalties for non-disclosure. As it stands now, the IRS requires you to simply pay 25percent irrespective of particular life situations. That in our view is indefensible.
The Indian American recognizes and completely agrees with the necessity for the IRS to take needed action and enact rules to track money flowing to terrorists, drug transaction and money laundering in safe havens outside the United States. The Indian American community requests that the IRS review and reconsider the rules towards more practical and prudent application both in the interest of justice and compliance of the law. We would like this ruling to be changed to make it fair. We also urge that it be applied in a more equitable manner that will not impose undue burden on good citizens who have not deliberately violated any law. To do otherwise is to inflict undue harm and cause extreme distress which cannot be the purpose of the US government and its law makers.