140 Foreign Banks Are Now The Focus of the IRS Investigation

The U.S. Treasury announced the current results of the Tax Amnesty that was offered for 2011 with the extended deadline of September 9, 2011.

A total of more than 30-thousand individuals have come forward under the amnesty programs for 2009 and 2011. The amount of additional revenue collected, on the 2009 amnesty program exceeded $2,200,000,000. Of the 2009 applications for amnesty, about 80% of the cases have been “closed.” It is unclear what Washington means by the word “closed” but it may include applicants that were later found as not qualifying for the amnesty program.

For the 2011 amnesty program, the IRS has disclosed that more than 12,000 individuals applied for the tax amnesty. It is staggering that even with less than three weeks into the deadline for the 2011 amnesty, the IRS has announced that $500,000,000 has already been collected from the 12,000 applicants without the soon-to-be assessment of massive penalties that will fall at approximately 50% of the tax assessment which will place the 2011 amnesty at nearly the $1 billion mark in just three weeks after the deadline. I doubt that the $500 million represents any substantial percentage of the 12,000 applicants since the period of time to work a particular complicated taxpayer case can take more than a year. With penalties at a much higher level for 2011 amnesty as compared to 2009 amnesty, I suspect that the gross revenue netted from the 2011 amnesty will be more than $3,000,000,000.

As I mentioned in my prior articles, the major effort in any IRS examination is to “expand” and “expand: and “expand”. This is clearly what is happening with the information gleamed from the more than 30,000 applicants. One of the areas of expansion is the focus on what banks are disclosed as potentially aiding, knowingly or unknowingly, in the evasion of their U.S. clients from paying U.S. taxes. The IRS did disclose recently that they are now looking at 140 overseas banks as a new major source of information on other U.S. individuals that have not come forward under the amnesty programs.

IRS Commissioner Doug Shulman stated, “By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts…we have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.” Shulman continued to say, “Global tax enforcement is a top priority at the IRS. Shulman noted that progress on multiple fronts, including groundbreaking international tax agreements and increased cooperation with other governments. In addition, the IRS and Justice Department have increased efforts involving criminal investigation of international tax evasion.

An IRS Representative said, “Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.” The financial impact can be seen in a variety of other areas beyond the 2009 and 2011 programs. Criminal Investigations Division of the U.S. Treasury has obtained criminal convictions involving Americans hiding assets offshore and received jail sentences running for months or years, and they have been ordered to pay hundreds of thousands and even millions of dollars.

Additionally, with the mode of “expand” for the IRS, information obtained and working cases that are spreading like the schematic of a family tree from these amnesty filers and foreign banks which will continue to provide gainful collection of larger and larger revenue of uncollected tax, interest and massive penalties as well as criminal prosecution.

CONCLUSION:

If you are one of the growing number of individuals that may be a part of this international dragnet and have not availed yourself of the amnesty programs, it is always wise to contact a competent tax attorney to discuss the totality of your situation and how best to protect yourself.