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Niles Elber Comments on "Super Penalty' for Offshore Accountholders With Banks on IRS's Bad Bank List

October 14, 2015, Tax Notes

Niles A. Elber spoke to Bloomberg BNA's Daily Tax Report concerning participants in the Internal Revenue Service's (IRS) Offshore Voluntary Disclosure Program (OVDP) potentially paying a 50% "super penalty" on accounts listed on the agency's bad bank list.  Taxpayers in the OVDP who initially paid a 27.5% miscellaneous penalty will now be required to pay a 50% penalty if they have accounts on the IRS's list of foreign financial institutions or facilitators.  Banks on this list have been publicly identified as being under investigation or as cooperating with a government investigation. Mr. Elber's comments follow a submission made to the IRS by the American Bar Association's (ABA) Tax Section on the IRS's OVDP and Streamlined Programs.  Mr. Elber assisted in the preparation of the submission along with other members of the  ABA Tax Section's Committee on Civil and Criminal Tax Penalties.   For the full story, please visit Bloomberg BNA's Daily Tax Report's website

Excerpt taken from the article.

"If your bank is on the Foreign Financial Facilitators List your miscellaneous penalty is automatically going up to 50 percent all the way across the board," Niles Elber, Caplin & Drysdale member, told Bloomberg BNA Oct. 14.

. . .

"We believe at the end of the day this is unduly harsh," Elber said. "There are different reasons why people come in or don't come in."

. . .

"We believe the IRS should reconsider its position here and allow theoretically barred refunds to offset liabilities in any of the eight years that a taxpayer is required to submit an amended tax return under the OVDP," Elber said.

There should be a balance, Elber said. The IRS isn't adhering hard and fast to the statute of limitations when it comes to accepting late taxes; therefore it shouldn't disallow losses because of a closed statute, he said.


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