Tax Shelters Spring a Leak-Offshore Tax Evaders Take Note

In less than a month after the voluntary offshore bank declaration amnesty deadline expired, the results are showing that tax collection efforts from once elusive off-shore account holders appears to be working. A recent Reuters News Article – America’s Rich Losing Tussle with Taxman dated September 30, revealed that since 2008, the IRS has been successful at cracking down on off-shore tax shelters and going after Swiss banks (initially) and publicly bringing charges against these institutions and their legal representation. These bullish practices have won the US the “toughest of all Western Countries award” for collection of monies due and sent a ripple effect through the global banking industry.

The new pressure for bank collaboration has resulted in increased fines and the names of thousands of American account holders who may not have complied with IRS requests for disclosure. With Western governments strapped for cash and worldwide wealth taxes on the rise, the once revered tax shelters and loopholes are already closing and it appears American policies for collection are slowly spreading to other countries such as the UK and beginning to take hold.

Europe is slowly cracking down on tax shelters as wealthy Europeans still use tax havens in places such as Monaco and the Channel Islands in Britain. With a significant number of millionaires in residence in the UK, effective loopholes for them have given London tax haven status for thousands of rich foreigners who earn their wealth outside the UK. In an attempt to step up collection efforts for tax evaders and political pressure to act, Parliament has changed tax laws to crack down on tax cheats, but these measures according to critics are “a tiny fraction of what could be clawed back if the real extent of undeclared money was revealed.”

Back in the US, the latest IRS figures show an estimated $2.7 billion in tax revenues collected as a result of the 2009 and 2011 Offshore Voluntary Disclosure Initiative (OVDI). $2.2 billion has been collected by people who participated in the 2009 program, and the IRS is starting to work through the 2011 applications ($500 million in payments so far from the 2011 program that just ended on September 9, 2011). The “amnesty” initiative allowed Americans to come forward and notify the IRS of foreign bank accounts that have held more than $10,000 at any given time last year and pay the back taxes. Not volunteering information on these accounts could lead to severe punishment including penalties and possibly jail time.

Strict regulations are also making offshore bankers such as HSBC uncomfortable with receiving American funds and therefore, not willing to deal with wealthy Americans outside the US because the risks are too large. It may only be a matter of time and economics until other Western economies are forced to increase their collection efforts and regulate tax havens in the global marketplace. It’s hard to know if in the future, voluntary amnesties and collection efforts will be offered again, the IRS has no current plans of doing so. But if you were not able to file for tax amnesty, and owe back taxes on undeclared funds in offshore bank accounts now is the time to get expert tax help as soon as possible to settle this matter once and for all.

There are still people out there who need to declare offshore bank accounts and now is better than never. Our team of tax attorneys, tax resolution specialists and CPAs can help you mitigate the severe IRS penalties and criminal sanctions for offshore account holders. By being timely and proactive with a foreign fund disclosure, you have a better chance to increase your chances to work out a structured IRS payment plan reduce your chances of severe IRS penalties. Don’t wait for IRS to come after you, we can help you resolve your IRS problems before it’s too late. Call us at 866-IRS-PROBLEMS (1-866-477-7762) or register for a free consultation.

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