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New Report Sheds More Light on How Common Tax Evasion Is

Posted in Offshore Account Update on May 8, 2015 | Share

Many investors are not 100 percent forthcoming with the Internal Revenue Service. However, the IRS is aiming to change this through a number of measures. While individuals are required to file annual reports on their offshore accounts using Form 8938, banks are also required to turn over investor information to comply with Foreign Account Tax Compliance Act (FATCA) regulations.

These regulations are designed to ensure that no offshore accounts remain undeclared.  The Department of Justice and Internal Revenue Service have also teamed up in large scale investigations of offshore banks to find taxpayers and financial advisors who have not complied with IRS rules.

Recently, Yahoo published an article showing just how much money is held in overseas tax havens and how much money each year is not reported to the IRS.  The information on the money being held offshore comes from leaked documents and provides further encouragement to the DOJ and IRS to continue their push to find offshore funds. 

Investors need to be aware of document leaks and government crackdown efforts and should consult with a Washington DC tax evasion attorney for help exploring options for reporting income voluntarily before becoming the subject of an IRS investigation.

Leaked Documents Highlight Scope of Tax Evasion

According to Yahoo, a whistleblower brought documents to the attention of the French government in 2010 that provided detailed information on HSBC’s private bank operations up to 2007.  The documents showed that the private bank helped celebrities, arms dealers, drug traffickers and other wealthy individuals dodge taxes and launder money. 

France shared the leaked documents with other governments worldwide, including in the United States, Germany and Britain.  The documents related to more than 100,000 account holders and legal entities from 200 different countries.  The accounts in question contained more than $100 billion in funds.

HSBC indicates the reports are outdated since they are from so long ago, but the documents are still raising questions about whether the former HSBC chairman was involved in the tax dodging or was simply not paying enough attention.  Since the former HSBC chair became a government trade minister after leaving the bank, this question has significant implications.

For investors, the reports also have implications as well -- and not just because the documents provided the government with detailed account information from people who may have had unreported money offshore.  Reports emphasizing the scope of secret offshore money only serve to spur governments to run more investigations, especially as governments are often criticized for not doing enough to go after people who evaded taxes.

France has already launched 103 actions based on tax evasion and money laundering going on at HSBC, and the British tax agency has already taken back 135 million Pounds in penalties from tax evaders.  Despite this, Yahoo reports that questions are being raised about why taxing authorities have not been even more aggressive with collecting revenue and prosecuting evaders.

Overseas tax havens may deprive governments of more than $200 billion annually in tax revenue, as more than $7.6 trillion is held in these offshore accounts.  Governments worldwide are going to continue efforts to recover these funds and more whistleblowers may come forward to provide documents similar to those showing the scope of the problem at HSBC.

Investors should act before the IRS finds unreported accounts. If you come forward on your own, you may be able to limit penalties. Contact Kevin Thorn, a tax evasion attorney in Washington DC, to learn more.


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