IRS Committed to Cracking Down on Offshore Tax Evasion

The IRS announced that hiding assets or money in offshore accounts remains high on its 2017 list of tax scams, commonly known as the “Dirty Dozen.” This list points out a number of common scams that taxpayers use to avoid paying their fair share.

The inclusion of offshore tax evasion on the Dirty Dozen is indicative that the IRS won’t be lightening up its efforts to stop offshore tax evasion schemes anytime soon, efforts that began almost a decade ago. As part of an initiative to crack down on offshore tax evasion, the IRS launched the Offshore Voluntary Disclosure Program. As part of the program, tens of thousands of people came forward and declared offshore accounts, helping the IRS collect millions — if not billions — in tax revenue. Following the success of the 2009–11 program, the program reopened in 2012, and it will be open for an indefinite period.

Offshore compliance remains a top IRS priority. We’ve collected $10 billion in back taxes in recent years with 100,000 taxpayers making use of our voluntary disclosure programs,” IRS Commissioner John Koskinen said. “The IRS receives more foreign account information each year, making it harder to hide income offshore. I urge taxpayers with international tax issues to come forward and get right with the system.”

In spite of its commitment to cracking down on offshore tax evasion, the IRS is facing challenges that make it increasingly difficult for it to send tax cheats to prison. The IRS Criminal Investigation Division and the Department of Justice work together to stop tax fraud and prosecute the people that engage in it. But the IRS has faced budget cuts and a significant reduction in criminal agents, with numbers falling 4.3 percent in 2016. Over the course of the past five years, agent staffing levels have fallen by 19 percent. That has meant there are less people and resources to crack down on tax scams, including offshore tax evasion.

In spite of constraints, the IRS will likely continue to pursue those hiding assets offshore to evade taxes. With the voluntary disclosure program is still open, the IRS is likely to criminally pursue those who don’t declare their assets — particularly if they have a considerable amount offshore and are likely to owe a hefty tax bill.


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