By JAY AKASIE
Special to the Sun
February 15, 2007

Consulates whose diplomatic workers refuse to pay parking fines in America could soon have another dubious distinction — ambassadors of tax evasion. The Internal Revenue Service says it's giving green card holders and other lower- to mid-level diplomatic workers until March 30 to either come clean on their past tax forms or face an audit.

A half of the consulates employees with federal tax obligations here fail to report their wages, falsify deductions, fail to pay self-employment tax, or simply don't file tax returns at all, according to the IRS.

The IRS announced the new deadline Tuesday. Several embassies requested more time to rally their employees and explain to them the importance of reporting their income taxes. The old deadline was February 20.

Higher level consulate employees are exempt from paying federal income taxes because of the diplomatic immunity they receive under various international treaties. Such immunity has long encouraged foreign fat cats to thumb their noses at New York City parking and traffic laws. But now it appears that unpaid parking violations are only the tip of the iceberg.

"This is the first time we've had to institute a program of this nature for this group of workers," an IRS spokesman, Kevin McKeon, said.

The IRS is billing the move as a one-time "settlement initiative," which is a nice way of saying: Pay up, or else. "Failure to act now could mean facing a costly audit process in the future," according to an IRS statement.

Employees at risk of being audited must first submit "amended or original" tax returns for the years 2003, 2004, and 2005 that "properly reflect" their income and expenses, according to the IRS. Those employees who don't come forward could face audits that cover more than just those three years.

" IRS intends to resolve tax noncompliance among those who work for embassies and international organizations," another IRS spokesman, Robert Marvin, said. "We are doing that by conducting outreach sessions to explain tax requirements and offering the settlement for affected taxpayers to resolve tax problems. At this time the door is wide open for voluntary resolution."

A spokeswoman for the Consulate General of Poland said she had not yet heard about the IRS initiative. At the Consulate General of India, the spokesman, Eugene Correa, said that as far as he is aware, the IRS has no jurisdiction over any Indian citizens who are employed there, whether or not they hold diplomatic-level posts. "Nobody pays taxes here," Mr. Correa said.

http://www.nysun.com/article/48735