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Canada Recovers Billions in Lost Revenue Stemming From Tax Evasion

Offshore Account Update

Posted on June 30, 2017 |

Canada, the United States, and many additional countries throughout the world have begun to aggressively pursue investigations and claims against investors who are accused of keeping funds offshore to evade their tax obligations. 

Financial institutions, including many foreign banks, are increasingly sharing information with taxing authorities to try to avoid criminal prosecution for their alleged role in helping to facilitate tax evasion. Voluntary disclosure programs have also become popular, with both the United States and Canada offering tax payers who have undeclared offshore funds the opportunity to limit their penalties by coming forward voluntarily and disclosing their accounts before the IRS finds them in an investigation.

Because of international efforts to fight tax evasion, many countries have been enormously successful in recovering lost revenue from investors with offshore funds.  Unfortunately, those with accounts held in foreign financial institutions have suffered substantial losses as part of government crackdowns into offshore investors. If you are an investor with funds offshore and you are not certain that you are in full compliance with IRS rules, you should contact a Boston international tax attorney to try to find out what your options are for avoiding or minimizing penalties in case the IRS decides to investigate you.

Canada Vows to Fight Tax Evasion and Collect Lost Revenue

To understand how successful countries are in collecting lost revenue due to a crackdown on offshore tax evaders, one only needs to look to Canada. As Bloomberg BNA reported recently, Canada is currently on track to recover around $9.6 billion in offshore tax evasion cases.

Canada is collecting a lot of money because it is pursuing cases against many investors believed to have been evading taxes by keeping funds offshore and not declaring them. Canada successfully obtained convictions of 42 different taxpayers during the 2016 to 2017 fiscal year. The taxpayers who were convicted collectively evaded around C$34 million in taxes and faced fines of C$12 million.  Many also received jail time, with the group of 42 taxpayers being sentenced to a total of 734 months of incarceration.

Canada will continue to do more. The Canada Revenue Agency has made a funding commitment of more than C$1 billion in an effort to fight tax evasion.  It is also making participation in its voluntary disclosure program more difficult so investors with funds offshore will be less likely to be admitted to the program and able to limit penalties they face through their participation. Taxing authorities are also currently auditing more than 820 taxpayers and are investing 20 cases of criminal tax evasion that may have been linked to offshore financial accounts.

The Canada Revenue Agency's audit process is being improved as well, and the CRA has conducted risk assessments of 1,300 people as of the beginning of April 2017.

If you are concerned that you could get caught up in an investigation into tax evasion, you should work with Kevin Thorn, a Boston tax lawyer. Your attorney can help you to understand the risks that the IRS will begin to conduct an investigation into you and will explain possible penalties if you are found to have violated tax laws.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989

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