In an article in today's Tax Notes Today, David Stewart reports that the IRS is creating "a new group within its Large and Midsize Business Division to examine wealthy taxpayers who use offshore arrangements for tax evasion."
The focus of the new group is "on examinations involving webs of entities and arrangements controlled by the high wealth taxpayer segment."
This development should be considered by those still sitting on the fence as to whether to join the IRS's voluntary disclosure initiative which ends 9/23/09. For those who had already decided to just hunker down for the long haul (hoping the statutes of limitations expire without discovery) rather than join the inititive, this might be a reason to reconsider that decision. Of course, many who have made the decision to hunker down are individuals with direct ownership involving no foreign entities or maneuverings to further obscure their ownership. In the current groupthink, these individuals with, to use sentencing jargon, less sophisticated means / culpability, may not be the focus of this particular follow-through, but the unquantifiable risk is that many of these persons will be discovered in the process of the new IRS group's activities. Their ability to hunker down without discovery for the long-term may be impaired. Moreover, at least for banks in Switzerland and even other countries in the ambit of influence of the OECD, the same imperatives that caused relaxation of treaty interpretation for Switzerland may encourage them to be more open than they previously have. Keep in mind that there is a long statute of limitations on potential civil and criminal penalties, so hunkering down involves years of a long period of potential risk, even if they clean up their acts on a go-forward basis.
Article citation: David D. Stewart, New IRS Group to Examine Wealthy Individuals Using Offshore Arrangements for Evasion, 2009 TNT 168-1.
9/2/2009 9:20 - see also a Bloomberg News article here.
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