A delegation of Indian community representative under the aegis of the National Indian American Coordinating Council met the Internal Revenue Service (IRS) officials to convey community's concerns ans distress regarding the new Offshore Voluntary Disclosure Initiative (OVDI) adn the way in which ti has been implemented. The delegation headed by Dr. Thomas Abraham, Founder President and Chairman Emeritus of the Global Organization of People of Indian Origin (GOPIO), included Mr. Lal Motwani, President of the National Federation of Indian American Associations (NFIA), Mr. Shailesh Patel, Director at Large of Asian American Hotel Owners Association (AAHOA) and Dr. Maya Chadda of GOPIO and Council on Foreign Relations.

The meeting at the IRS headquarters in Washington, DC was arranged by the office of Congressman Steve LaTourette of Ohio. IRS was represented by Ms. Rosemary Sereti, Director of International Individual Tax Compliance; Attorney Advisors to Deputy Commissioner Ms. Jennifer Beth and Mr. David Vorley, and Legislative Counsel Suzanne R. Sinno of the Office of the Legislative Affairs.

In the meeting the Indian community delegation stressed the following points:

First they stressed that their collective survey of the Indiana American community revealed a very high level of distress verging on panic for the following 
Reasons.
 

1. Most have only recently found out that they are in violation of the IRSrequirements of the voluntary disclosure of foreign accounts and income.Information has been sketchy and almost no one knew what the procedure wasto come under the 2011 amnesty program. Those who found out only recently are leftwith no time to file before august 31 2011. Nor are they aware that they need a clearance from the Treasury Department for entering the amnestyprogram. The delegation made the IRS officials aware of this drawing on real lifeexamples and explained why the community is distressed and confused.

2. People who are caught between the lack of information and lack of time arenot willfully violating the tax law. The delegation in fact pointed out thatthere were broadly two categories of people who are in this situation, thosewho have sent money to help their extended families in India, supportingaging parents, finance children's education and that of siblings and youngermembers of the extended family. Transfer of money for these reasons wasnatural for the first generation immigrants. Culturally Asian Americans, Indians in particular, are intensely family oriented. The second categoryincluded people who have worked, saved and are sending money in preparationof retirement. This usually takes the form of property and alliedinvestments. These monies are also usually after tax monies.

The delegation stressed that the way in which the penalty is imposed, i.e. 25 percenton the highest balance over the eight years span, was totally out ofproportion to the presumed willful violation. Such a level of penulty itself violates theprinciple of proportionality on which the US law rests. The penulty therefore violates the 8^thamendment of the US constitution and the case law precedents it has set. If the penalty was reasonable, more tax payers will comply. It is obviously in the Interest of the IRS to promote wider compliance of the tax laws.

3. The third point was about the way the IRS has implemented the amnestyprogram. After entering the program, the tax payees or their accountantsonly deal with agents who are given no power to separate willfulnon-compliance from innocent non-compliance. They simply administer the lawand impose punishing penalty. Even If the tax payer has genuine groundsfor failing to disclose, the agents are not allowed to use their discretion. This will punish the innocent, in fact the bulk of the community who are law abiding citizens and have regularly paid their dues to the IRS.

Photo above: Indian American community Representatives meet with IRS officials on the OVDI issue. From L. to R.: Shailesh Patel, David Vorley, Rosemary Sereti, Jennifer Beth, Lal Motwani, Dr. Maya Chadda and Dr. ThomasAbraham

The delegation suggested that as a first and immediate step, the IRS can take a step to empower the agents with discretionary judgement.

The delegation also shared the fear of being singled out among the groups astargets of IRS inquiry.

They suggested that penalty should be levied on non-reported income and notfor non-disclosure.

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.

Global Organization of People of Indian Origin

 GOPIO International, New York, NY

www.gopio.net

Contact: Inder Singh, Chairman

Tel: 1-818 708-3885, E-mail: gopio-intl@sbcglobal.net

National Federation of Indian American Associations (NFIA), Bellrose, NY

www.nfia.net

Contact: Lal K. Motwani, President

Tel: 1-646 724-1153, E-Mail: lmotwani@verizon.net

American Association of Physicians of Indian Origin

(AAPI), Oak Brook, IL

www.aapiusa.org

Contact: Sunita Kanumury, MD, President

Tel: 1-630 990-2277, E-mail: info@aapiusa.org

Asian American Hotel Owners Association

(AAHOA), Atlanta, GA

www.aahoa.com

Contact: Hemant D. Patel, Chairman &

Fred Schwartz, President

Tel: 1-404 816-5759, E-mail: info@aahoa.com