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IRS Announces “Unprecedented” Effort to Crack Down on Offshore Tax Evasion

Hot Topics, Offshore Account Update

Posted on January 28, 2020 |

On January 23, 2020, the Internal Revenue Service (IRS) announced the first major crackdown conducted by the Joint Chiefs of Global Tax Enforcement. In doing so, it sent a stern warning to U.S. taxpayers who have offshore accounts, and it signaled that taxpayers who fail to comply with the IRS voluntary disclosure requirements may be at risk in similar coordinated international law enforcement efforts in the coming years.

Joint Chiefs of Global Tax Enforcement to Target International Tax Havens Serving Clients in the U.S. and Other Countries

The Joint Chiefs of Global Tax Enforcement, known as the J5, is comprised of top agents and officials with IRS Criminal Investigation (IRS-CI) and the national tax authorities in Australia, Canada, the Netherlands, and the United Kingdom. These agencies formed the J5 in 2018 in an effort to combat widespread tax evasion and tax fraud perpetrated through the use of international banks that offer services to individuals and organizations seeking to launder money and avoid their tax obligations.

In its first major crackdown, the J5 targeted a bank in Central America which, according to the IRS, the J5 determined, “a number of clients [were] be using . . . to conceal and transfer wealth anonymously [in order] to evade their tax obligations and launder the proceeds of crime.” In its News Release announcing the takedown, the IRS indicated that it would be the first of many.

Avoiding IRS Penalties Through Voluntary Disclosure Compliance

As the IRS and the J5 continue their efforts to identify and prosecute international “tax cheats,” U.S. taxpayers who use offshore accounts for lawful purposes are likely to increasingly find themselves in the IRS’s crosshairs. Among other things, this means that U.S. taxpayers who hold assets offshore will need to place heightened emphasis on voluntary disclosure compliance.

Under U.S. federal tax law, all U.S. taxpayers are required to report their offshore holdings to the IRS. There are various voluntary disclosure forms that taxpayers may need to file, and there are various steps involved in safely disclosing offshore accounts. While making voluntary disclosures is necessary in order to avoid or mitigate any potential liability, it can also be very dangerous if not handled appropriately. Taxpayers in Massachusetts who have offshore accounts should discuss their options with a Boston tax lawyer, as disclosure violations have the potential to lead to civil or criminal penalties.

What to Do if You are Contacted by an IRS Auditor or IRS-CI

In addition to voluntary disclosure compliance, U.S. taxpayers with offshore holdings need to be aware of the risk of being targeted by the IRS or J5 as well. Learn more about the risks involved in offshore tax evasion investigations and what a Boston criminal tax lawyer can do to help.

Contact Boston Tax Lawyer Kevin E. Thorn, Managing Partner, Thorn Law Group

For more information about the IRS’s voluntary disclosure programs and the other legal implications of holding offshore accounts as a U.S. taxpayer, contact Thorn Law Group. To request a confidential consultation with Boston tax lawyer Kevin E. Thorn, Managing Partner, call 617-692-2989 or get in touch online now.


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