Report Shows IRS Spent Millions Fighting Offshore Tax Evasion, But Little Action Has Been TakenOffshore Account Update
Posted on August 31, 2018 | Share
If you have undeclared offshore funds, it is important that you consult with a Boston international tax attorney to explore your options to avoid becoming the target of an investigation and to protect your funds. The IRS has been on an aggressive campaign in recent years with the goal of fighting offshore tax evasion.
A new report from the Inspector General has called into question some of the techniques that the IRS has used to-date and the IRS has agreed to adopt six new protocols in regards to the way it pursues investigations and cases involving income kept offshore. Taxpayers should work with their attorney to understand the processes put in place by the IRS for conducting investigations and to explore options for avoiding a potentially damaging investigation.
Report Finds IRS Spent $380 Million On Fighting Offshore Tax Evasion With Little Success
The IRS will be making some changes going forward to the process of investigating offshore tax evasion because the inspector general found the process it was using under the Foreign Account Tax Compliance Act has not been very effective at addressing the problem of undeclared offshore funds.
The Foreign Account Tax Compliance Act (FATCA) was passed in 2010 with the goal of encouraging offshore investors to voluntarily come forward and report undeclared assets being kept offshore. FATCA worked by requiring foreign financial institutions to turn over information on American accountholders with money that was invested offshore. The hope was that taxpayers with undeclared offshore assets would become afraid their broker or bank would turn in their details, prompting the IRS to come after them. In response, the IRS anticipated some taxpayers would come forward to voluntarily declare their secret offshore assets.
This largely didn't occur. Many Americans renounced their citizenship in response to the burdens imposed by FATCA, which could result in less tax revenue being collected in the future. And, the IRS received endless amounts of paperwork from the foreign financial institutions which took a long time to process.
Much of the information received from the paperwork that was provided by the foreign financial institutions proved to be largely unusable for the IRS. It was too difficult to verify the information, but a lot of time and money was spent attempting to make use of the data provided. In fact, the Inspector General found that the IRS had spent around $380 million trying to administer the FATCA program – but this led to very few enforcement actions being taken. And, the report also revealed that the IRS neglected other responsibilities while processing this paperwork.
Changes will soon be made, however, and the IRS will operate under a new comprehensive compliance plan. This means that more offshore investors with offshore funds could possibly be at risk of enforcement actions in the future if the IRS finds a more effective approach to targeted taxpayers who have undeclared foreign funds.
If you have money offshore you have not reported to the IRS, you should consult with a Boston international tax attorney Kevin Thorn for help as soon as possible to explore your options for protecting your assets and protecting yourself from adverse IRS action. For a consultation, contact Kevin E. Thorn, Managing Partner, at firstname.lastname@example.org or (617) 692-2989 today.