Many Americans Abroad Surprised by Tax Code's Nasty BiteThe commenter was referring to statistics in the following article: Brian Knowlton, Many Americans Abroad Surprised by Tax Code's Nasty Bite (NYT 5/10/12), here.
From the above article
FBAR forms filed in 2009 276,386
filed in 2011 618,134
I will use a separate blog entry to respond to this data. My response is in the form of a question to which I hope readers will respond, particularly readers with some experience with criminal tax practice.
I suspect that the bulk of the delta filers between 2009 and 2011 (app 340,000, including the first time filers in 2010) are had accounts prior 2010 who did not join OVDI or do a quiet disclosure. Let's just say that 250,00 of them are first time filers in 2010 or 2011 who had accounts in prior years but did not join OVDI or make a quiet disclosure. They are the go-forward data set.
How many do you think will be (a) investigated criminally for past years or (b) prosecuted for past years?
Keep in mind that DOJ Tax CES prosecutes at most, say, 3,000 tax cases (max) of all sorts every year.
And, a related question, how do you think the IRS will investigate civilly -- well audit, even if not civilly (sorry for the pun -- in enough detail to consider significant civil penalties? Keep in mind in this regard that well-advised taxpayers doing a go-forward will have self-selected a data set in which the IRS will not be able to assert or sustain significant penalties in the bulk of the cases. And, if the IRS perceives that, will it nevertheless divert major resources -- which are limited and will take away from other enforcement efforts -- to chase down relatively small penalties? Finally, keep in mind that the FBAR penalties the IRS asserts after this major audit enforcement initiative would then have to be followed by more civil litigation enforcement than either DOJ Tax or the Courts likely have otherwise uncommitted resources to handle.