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Niles A. Elber Quoted in Tax Notes, Streamlined FBAR Procedures Might Have Narrow Application

September 10, 2012, Tax Notes
Excerpt taken from the article.

Keeping to its promised September 1 effective date, the IRS on August 31 issued a questionnaire and instructions for streamlined filing compliance procedures for previously unreported offshore accounts held by U.S. taxpayers who present little risk of noncompliance.

Practitioners, however, told Tax Analysts that the criteria for determining low-risk status are so narrow that few taxpayers are likely to qualify, and that the program may in effect be restricted to those taxpayers who have Canadian registered retirement savings plans (RRSPs).

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[Barbara T. Kaplan of Greenberg Traurig LLP] said two criteria in particular that raise a taxpayer's risk level could prove troublesome for potential applicants to the program. A taxpayer's risk will increase if the taxpayer has a financial interest in or authority over a financial account located outside its country of residence, or if it holds a financial interest in an entity or entities located outside its country of  residence.

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Niles A. Elber of Caplin & Drysdale agreed, equating Europeans holding foreign accounts to U.S. residents keeping bank accounts in different states. "Say for instance you live in Europe -- it's like living in D.C. and having an account in Maryland," he said. "We're talking about a very small geographic distance, and all of a sudden that's a factor that increases risk?"

Elber said the IRS is too concerned with "people who are trying to game this" and has made compliance too onerous for people who want to participate. Regarding the risk factor of a tax payer having an interest in an entity outside his country of residence, Elber was equally critical. "It's a geographic thing to me, that countries in other regions of the world are more closely located to one another," he said. "I don't see why it would be terribly unreasonable for an Italian to have a business interest in Greece, for example."

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