IRS is Working Vigorously to Target Unreported Foreign Income and Related Bank Accounts

IRVINE, CA, January 06, 2013

Recently, at an American Bar Association sponsored Criminal Tax Conference in Las Vegas, John McDougal, special trial attorney and division counsel for the IRS, stated, "You are going to hear more from us on that, it just hasn't hit the press yet." At this conference McDougal and others outlined for attendees the Service's plans and steps taken to address the continual problem of unreported foreign income. It has always been the goal of such efforts to encourage people to come into compliance, primarily through the different reincarnations of the Offshore Voluntary Disclosure Program. However, this does not mean that the IRS is not making a concerted effort to ferret out recurrent tax evaders.

Up until now the focus has been principally on Switzerland, a traditional tax haven, but this is rapidly changing. The Service is branching out into other parts of the world. Sandra Brown, assistant U.S. attorney and tax division chief in the U.S. attorney's office for the Central District of California, said other countries are working with the U.S. to collectively gather information on tax evasion. Despite the adoption and implementation of the Foreign Account Tax Compliance Act, treaties are still the vehicle driving intergovernmental cooperation and have become, "a matter of course rather than isolated incidents," Brown asserted. Through these treaties the possibility that multijurisdictional evaders will escape detection grows ever slimmer.

To improve consistency in this area McDougal noted, "We're making a real effort to coordinate what the agents are doing on these similar types of examinations and are involving counsel earlier." The use of counsel is to reinforce proper case development and does not signal eventual criminal prosecution, he said. With these new procedures in place the Service maintains it will only assert penalties and recommend prosecution "when they fit." However, every effort will be made to determine precisely what a taxpayer owes. Nonetheless, the IRS is placing a priority on referring cases to the IRS Criminal Investigation Division.

What remains, is that taxpayers can expect future "bombshell" announcements by the IRS. Deferred prosecution agreements like the kind used with Switzerland has given the IRS a wealth of resources to tap in its efforts to discover accountholder information. Some of the resources include testimony by whistleblowers that have indicated large-scale tax evasion schemes and patterns the IRS and Department of Justice should be mindful of. Kevin M. Downing of Miller & Chevalier declared, "In 15 years at the Department of Justice, I've never seen anything like this with the number of people motivated to come in...it's a real game changer."

At this time the IRS has several summonses in various stages of preparation that will target more than just banks and other foreign financial institutions with an eye towards making "people feel more threatened [which] will increase...opportunities for information gathering," confided McDougal. The IRS is building an "effective examination and prosecution process that adds credibility to the threat of action if you don't come in and self-report," he said.

Although foreign voluntary disclosures may have slowed, the IRS maintains a vigilant effort towards discovering unreported income. The only way to shield oneself from certain criminal prosecution and the possibility of federal incarceration is to seek the assistance of a knowledgeable and experienced tax attorney that can effectively guide you through the Offshore Voluntary Disclosure Program and bring you back into compliance.

To learn more or seek assistance from the Tax Law Office of David W. Klasing see attached:

http://www.klasing-associates.com/Tax-Law/FBAR-Compliance-and-Disclosure.shtml

http://www.klasing-associates.com/FBAR-Compliance-and-Disclosure-FAQ/

http://www.klasing-associates.com/Tax-Law/Previous-Voluntary-Disclosure-Program.shtml