HIGH NOON IS DRAWING NEARER FOR THOSE STILL OUT IN THE COLD WITH UNREPORTED OFFSHORE ACCOUNTS

In director Fred Zinnemann’s iconic western, “High Noon,” (1952), Will Kane (Gary Cooper) is the retiring lawman in a small town. On the day of his wedding to Ana Fowler (Grace Kelley) he learns that Frank Miller whom he’d sent to prison is returning on the noon train with obvious plans for revenge.  Three of Miller’s men are already waiting at the station. Will was going to leave town with his wife but decides he must stay to face Miller and his gang.  His bride admonishes that he has no obligation and doesn’t have to stay. Will answers her, “I’ve got to.  That’s the whole thing.”  The town abandons him as the clock dramatically ticks away the minutes towards noon. 

Will explains to his wife that he has no choice.  If he ran, he’d always be running from one town to another, and Miller would always be pursuing.  Thus, he had to face the problem here in this town. Running solved nothing. Will Kane’s reasoning is equally cogent for those with unreported offshore bank accounts.

The IRS is as relentless in pursuing offshore tax scofflaws as was Frank Miller in seeking revenge on Will Kane.  Moreover the IRS has garnered substantial data from the 2009 and 2011 Offshore Voluntary Disclosure submissions which it has entered into its data-mining and analysis program called “E-Trak.” (According to a report of the Treasury Inspector General for Tax administration (TIGTA), “The 2009 Offshore Voluntary Disclosure Initiative Increased Taxpayer Compliance, but Some Improvements Are Needed,” (September 21, 2011)).   The software matches common data points from different names and other information entered.  With this software IRS can find connections between seemingly random data points.  With over 33,000 participants already having made detailed disclosures of all names, places, dates and communications concerning their offshore accounts, IRS is able (similar to FBI programs) connect the dots the lead to new individuals with unreported offshore accounts. 

In addition, progress in implementing FATCA is also creating more tentacles that can reach out to where people are hiding.  The Treasury has already entered into bilateral agreements with the UK, Mexico and Denmark to implement FATCA, is near concluding agreements and with many others and negotiating with yet more countries.  The world is definitely shrinking.  A smaller world enlarges the risk of being caught.  These developments have not gone unnoticed.  Nina Olsen, the National Taxpayer Advocate speaking at an American Bar Association Tax Section conference noted that already 28,000 taxpayers have applied under the 2012 Offshore Voluntary Disclosure Program (see Tax Wars Blog “Still Out in the Cold: IRS Leaves Door Open for Voluntary Disclosure – 2012 OVDP,” posted 8/6/12; and “OVDP 2012 Update,” posted 10/15/12).

The 2012 OVDP is not perfect or perfectly fair.  For one thing it lumps everyone into one large herd, regardless of differing degrees of culpability or amounts involved with only narrow exceptions.  For another, the possible criminal sanctions force those with reasonable cause for non-filing to enter the program and “opt-out” if they believe the penalty is unfair to them. Also, while the traditional voluntary disclosure policy of IRS was intended at tax criminals only, non-criminals may feel compelled to enter the OVDP to avoid the expropriation-like civil penalties. 

Still for many the 2012 OVDP is the one “Fail-Safe” show in town compared to other alternatives; and, for many who still feel comfortable in their anonymity, high noon may in fact be approaching as E-Trak works to pick up their trail.

Thus, consider High Noon’s Will Kane to have made the only rational decision in deciding to return to town to face a daunting test at noon.  Trying to hide means a life spent looking over one’s shoulder.  For those on the run, time for averting disastrous civil and criminal consequences may be running out.

© 2012 by Robert S. Steinberg, Esquire
All rights reserved

This entry was posted in 2012 OVDP, TAX and tagged , , , , , , , , , . Bookmark the permalink.

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