Thursday, December 8, 2016

Offshore Evasion: IRS Summons Setback Does Not Mean Game Lost (12/8/16)

I recently blogged about the decision in United States v. Greenfield, 831 F.3d 106 (2d Cir. 8/1/16), here, about failed summons enforcement for offshore account records.  Important CA2 Opinion on Foregone Conclusion Required To Overcome Fifth Amendment Act of Production Assertion to Summons Production of Foreign Documents, Including Bank Records (Federal Tax Crimes Blog 8/1/16), here.  Procedurally Taxing offers a great blog showing more audit and need context.  Dave Breen, Grinches, Liechtenstein Royal Princes, Bankers, Toymakers (and Offshore Evasion): A Holiday Summons Tale (Procedurally Taxing 12/8/16), here.  

Among other things Dave notes the difficulty the IRS has in going back to older years.  Indeed, the failed IRS attempt in Greenfield resulted from a too tenuous extrapolation from 2001 to 2013.  But, while Greenfield may have achieved at least a temporary victory, the rest of the universe of offshore evaders should not rest too easy.  The IRS will continue its efforts to discover the offshore noncompliance.  Some taxpayers will win the lottery; some will not.  Dave concludes:
But before you settle your brains for a long winter’s nap, think about this.  Even though Steven may have sunk IRS’s Battleship, today IRS is not in any immediate Trouble.  In fact, it is already working on a new Mousetrap.  On November 30, 2016 IRS received permission to issue a John Doe summons to Coinbase, Inc., a virtual currency exchanger headquartered in San Francisco, California, that Les discussed last month in his post IRS Seeks Information via John Doe Summons Request on Bitcoin Users.   
The moral of the story?  Uno’s?  I suspect many clients with assets hidden offshore will still take a big Risk by not coming in under IRS’s voluntary disclosure program, but you don’t have to be a Mastermind to see that many of them will ultimately be Sorry.  But, I guess that’s The Game of Life.  Happy Holidays!

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