Ever wonder the best way to catch a crook? Well, recent evidence shows than when it comes to the Internal Revenue Service, they are catching a lot more with honey instead of that old vinegar recipe they’ve been using. In the past months, over 15,000 taxpayers with hidden offshore accounts have stepped forward to man up to the plate and make things right with the US government. They made this move due to an amnesty program that waived a large portion of the penalties and interest that taxpayers would be responsible for if their accounts were discovered through traditional means.
The Sudden IRS Windfall
So what did this mean for the IRS? The back taxes collected amounted to over $2.2 billion dollars total plus another half billion in fees and interest. In total, there have been over 30,000 step forward to admit their wrongdoing in exchange for a slap on the wrist and a hefty past-due bill.
A statement that was released earlier this week by the IRS says that the current program
“…Allows for about 15,000 voluntary disclosures with another 3,000 applicants stepping forward after the deadline. The applicants who came forward after the deadline were allowed to participate in the 2011 initiative. As well, the 2011 program has generated an additional 12,000 voluntary disclosures, with many additional applications to be counted.”
Even though the amnesty campaign has been a staggering success, the IRS believes that the long-term benefits have yet to be fully discovered. Once a hidden account is disclosed by a taxpayer it would be awfully difficult for them to go back into hiding once again. There are still hundreds of millions of dollars in penalties and interest to collect as well; all of which will help local economies throughout the United States.
IRS Commissioner Doug Shulman added, “We are in the middle of an unprecedented period for our global international tax enforcement efforts. We have finally pierced international bank secrecy laws and we are making a serious dent in offshore tax evasion.”
Switching Stances in a Losing Fight
It’s not like the government hasn’t tried other methods to catch up with delinquent taxpayers who are hiding money overseas; there has been increases pressure on financial institutions all over the globe. The IRS has been requesting the names and account numbers of US citizens holding large amounts of cash hidden within offshore accounts for decades now and they have only seen limited success.
The Swiss in particular have been viewed as a financial haven in recent times and it came as quite a surprise when UBS, Switzerland’s largest bank, finally caved under the pressure and signed a treaty with the US Department of the Treasury. When this deal was finalized, the US collected more than $780 million in restitution.
For clarity, IRS commissioner Shulman also added, “My goal all along was to get people back into the U.S. tax system. Not only are we bringing people back into the U.S tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
The Future of Tax Collecting
This is just one financial institution in one country though; there are thousands of others skimming under the US Government’s radar. Over the past three years the IRS has been able to close approximately 80% of its cases involving questionable banking accounts in at least 140 countries.
This government agency has also made it crystal clear that, “Global tax enforcement” is a top priority, involving “international tax agreements and increased cooperation with other governments. All of these efforts are channeled in order to pursue cases involving criminal investigation of international tax evasion.”
It is doubtful that the US government’s problems are over in terms of tax evasion, but at least the IRS is still making positive strides in the right direction. The latest example showed nearly 2.7 billion reasons why out-of-the-box thinking will likely become closer to protocol in the future while hunting down tax evaders.