Thousands of individuals continue to dodge taxes through offshore bank accounts. Beware; the U.S. government knows who you are!

By Alan L. Olsen, CPA, MBA (tax)
Managing Partner
Greenstein, Rogoff, Olsen & Co.
Posted: 6/28/10

In the next few months, the Department of Justice plans to follow up on all leads regarding offshore tax dodging that they’ve obtained via voluntary disclosures as various banks have come forward to try to purify themselves. (1)

Kevin Downing, a senior tax attorney of the U.S. Department of Justice, said while touring several cities in Asia with his Justice Department team to discuss cross-border tax prosecution, "We expect over the next couple of years to have somewhere between 4,000 and 7,000 cases coming to us. These are from banks and governments cooperating with us.” (1)

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According to Reuters (Wong-Anan; Azhar),(1), some private banking clients are choosing to close Swiss accounts and carry cash by hand back to the United States, to avoid an electronic trail, only to be caught by U.S. law enforcement officers. Not realizing this money is traceable, they are then penalized for tax evasion and illegal smuggling of money into the country. Since the start of the U.S. crackdown on tax evasion, money has moved from the Caribbean to Switzerland and Asia.

The DOJ objective is to bring taxpayers who have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws. The information gathered from taxpayers making voluntary disclosures under this practice will be used to further the IRS’s understanding of how foreign accounts and foreign entities are promoted to United States taxpayers as ways to avoid or evade tax. Data gathered will be used in developing additional strategies to inhibit promoters and facilitators from soliciting new clients.

About 15,000 Americans with offshore accounts came clean under an amnesty program last year, giving them reduced penalties and a chance to avoid criminal prosecution while giving authorities a trove of information to assist their hunt. "We now have the ability to go back through with voluntary disclosures and really target the banks with witnesses and evidence that's right in the United States," Downing said.

There are many other taxpayers considering making voluntary disclosures but are reportedly reluctant to come forward because of uncertainty about the amount of their liability for potentially onerous civil penalties. In order to resolve these cases in an organized, coordinated manner and to make exposure to civil penalties more predictable, the IRS has decided to centralize the civil processing of offshore voluntary disclosures and to offer a uniform penalty structure for taxpayers who voluntarily come forward. These steps were taken to ensure that taxpayers are treated consistently and predictably. (1)

For more information about this and other tax related issues, watch the following GROCO videos:

http://www.youtube.com/watch?v=xSISKcn_zf0
http://www.youtube.com/watch?v=XZbETlevTAw
http://www.youtube.com/watch?v=ni2PoMbp1W4
http://www.irs.gov/newsroom/article/0,,id=210027,00.html

(1)http://uk.reuters.com/article/idUKSGE64207X20100503

Alan has worked with some of the most successful entrepreneurs in the world. He is available to discuss these tips in media interviews, as well as appear on radio and television. Contact Melissa Kay at Melissa@marketbuilderspr.com or 443.803.7154.