On July 8, 21014 Edward Cronin, Associate Chief Counsel (Criminal Tax) and Don Fort, CID Director of Field Operations participated in an ABA Tax Section Webinar, “Current IRS Criminal Investigation Enforcement Priorities and Issues.” Some of the highlights from the written materials and speaker comments is summarized below.
INTERNATIONAL STATISTICS FOR CID FY 2013
One of CID’s primary missions still is, “To identify taxpayers who commit tax evasion by using offshore accounts and abusive schemes.” This mission includes pursuing FBAR non-filers. During IRS Fiscal Year 2013, CI initialed Indictments and Convictions were as follows:
- 184 Indictments (or Informations).
- 149 Convictions.
- Conviction rate: 85.98%
- Sentenced: 125
- Average months to serve: 51
GREATER FLOW OF INFORMATION COMING INTO CID
A tremendous amount of fresh data and information is now flowing into CID, including data, information and leads:
- From Whistleblowers
- Obtained through the Offshore Voluntary Disclosure Programs.
- To date, there have been over 40,000 participants in the various OVDPs.
- As of the end of 6/30/12, there were 4,699 participants in the 2012 version of the OVDP.
- Obtained by Special Agent Attaches now in 16 countries including Beijing, Bogata’, London, Mexico City, Sydney to name some.
- Under Tax Information Exchange Agreements signed under the OECD scheme.
- From the 106 Swiss Banks seeking Non-Prosecution Agreements.
- As a result of the Credit Swiss guilty plea.
- Beginning July 1, from the 77,000 banks that have agreed to comply with FATCA.
ON WHOM IS IRS CID FOCUSING?
- Promoters or enablers who have assisted U.S. taxpayers in hiding offshore financial assets by utilizing various artificial structures such as Foundations.
- Banks who promoted or willingly participated in offshore evasion schemes.
- U.S. taxpayers who knowingly used such programs and failed to disclose their offshore financial assets.
- With the wealth of new information and data that CID will be receiving, it is likely that the number of indictments will increase sharply despite the strains budget cuts have imposed on IRS resources.
- Many taxpayers have been spurred on to seek counsel about coming into compliance by the IRS announcement of its new Streamlined Process for U.S. Taxpayers. Yet, many of these newly motivated taxpayers will not qualify for the Streamlined Process because their actions in setting up and maintaining offshore accounts will clearly show indicia of willfulness.
- Thus, decisions about how to safely come into compliance will continue to be a vexing and delicate balancing act with the OVDP protection from criminal exposure weight on one scale-pan and other alternatives to lower the FBAR civil penalty below 27.5% on the other. There are no generalities here. Only through a careful analysis of a taxpayer’s particular situation by capable legal tax-counsel can one arrive at the safest solution in a particular case.
© 2014 by Robert S. Steinberg, Esquire
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