IRS Crackdown on Offshore Accounts Nets $5 Billion
More than 33,000 people reported offshore accounts to the IRS, resulting in revenue of more than $5 billion. But offshore accounts are only the beginning. The IRS is also looking at you.
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After the Internal Revenue Service and the U.S. Department of Justice negotiated a settlement with Swiss banking giant UBS to release account information, effectively piercing the once-impenetrable Swiss banking veil, U.S. officials offered a deal to taxpayers hiding money offshore.
Come clean now, they said, and be spared criminal prosecution.
The results have been staggering, exceeding even the government’s most optimistic forecasts.
In June, the IRS announced that it had collected more than $5 billion in tax revenue from 33,000 voluntary disclosures of offshore accounts.
“We continue to make strong progress in our international compliance efforts that help ensure honest taxpayers are not footing the bill for those hiding assets offshore,” IRS Commissioner Doug Shulman said in a statement. “People are finding it tougher and tougher to keep their assets hidden in offshore accounts.”
The voluntary disclosure program is still available for taxpayers who have not come forward, but the U.S. government raised the offshore penalty from 25 percent to 27.5 percent.
Of course, most average Americans don’t stash hundreds of thousands of dollars in offshore accounts. Only the wealthiest Americans seem to do that — but don’t make the assumption that the IRS is only going after America’s Richey Riches.
Indeed, as the economy has faltered and new tax revenues have waned, the IRS has been under increasing pressure to bring in more tax revenue through enforcement programs — that is, getting taxpayers to pay money they owe from previous years.
In December 2011, at a speech at George Washington University, Schulman told the audience that the IRS was “turning up the pressure” on tax cheats.
In the IRS’s view, these tax cheats include not only those with Swiss accounts but people who are not reporting all of their income for the year.
The IRS is identifying tax cheats with a two-pronged approach — leveraging technology to isolate tax returns that likely involve cheating and then assigning more revenue agents to inspect those returns.
There’s already been some measurable effect. Today, about one in every 100 U.S. taxpayers is being audited — near an all-time high.
What’s more, due to sophisticated software that analyzes tax returns, those being audited are more likely than ever before to be involved in tax cheating, meaning that IRS has not only stepped up audits but become significantly better at identifying tax returns most worthy of auditing.
What does this mean for you? Nothing at all if you’re not cheating on your taxes, of course. But if you are cheating? Watch out.
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I am Michael Rozbruch – a Certified Tax Resolution Specialist and a member of the American Society of IRS Problem Solvers and a Maryland CPA. Contact my office – Tax Resolution Services – at 866-477-7762 to obtain a free subscription to our newsletter titled “The IRS Times & Inquirer”.
More Tax Help, IRS News and Tax Relief Tips:
- IRS Will Stop at Nothing for U.S. Names of Swiss Bank Account Holders Who May be Guilty of Tax Evasion
- The IRS Voluntary Disclosure Program is Over for Those Hiding Money Overseas – Reducing IRS Penalties is Still Possible with Help from a Tax Professional
Tags: IRS and offshore banking, IRS Commissioner Doug Shulman, IRS voluntary disclosure program, Michael Rozbruch, offshore assets, Offshore Banking, Swiss banking, tax audit, tax cheats, tax evasion, tax resolution services, Tax Resolution Specialist, tax return audits, tax revenue from offshore accounts, UBS, Voluntary Disclosure
