Is the IRS Involved in International Tax Evasion Investigations?
The IRS has stated time and again that international tax compliance is a top priority. The number of international tax schemes continues to rise, which include cross-border transactions. The IRS has established overseas offices and regardless of where the transaction takes place, the IRS is vigorously pursuing tax cheats around the world.
Overseas Tax Treaties
The US has over 51 tax treaties in place with foreign countries, which makes it that more difficult to evade the IRS once they have set their sights on you. The IRS Criminal Investigation unit (CI) coordinates these efforts. And they are succeeding because the US Federal government has the power to punish countries and their citizens if they are found to be complicit.
The types of frauds are many including not reporting money you have in bank accounts overseas and unreported foreign earned income. You are ranked right besides tax schemes, money laundering, flow of narcotics and terrorist funding. All these crimes share a common core as a financial crime and that’s the CI’s domain.
The CI has highly trained and specialized forensic accountants as agents who can follow a money trail better than most hound dogs. They start from the point of the crime to the criminal and establish culpability. They will find whatever money you have hiding. With tax treaties in place, countries have adopted tax standards on exchanging tax information.
Bank Secrecy Laws
You can forget about bank secrecy laws. And if you are a dual national and think you can hide money under another name you had better think twice. Here’s a quote from the IRS “To enhance its international efforts Criminal Investigation has expanded its overseas presence by assigning attachés to key foreign embassies and consulates. Attachés establish strong ties with our foreign government and law enforcement partners working with them to gather and share information about possible financial crimes. Criminal Investigation also actively participates in a number of international financial task force groups to investigate significant areas of noncompliance and criminal activity. Criminal Investigation participates in INTERPOL, the Terrorist Finance Working Group (TFWG), the Financial Action Task Force (FATF), and the Organization for Economic Co-operation and Development (OECD).”
The world is smaller via the advent of technology and the IRS is set on bringing tax cheats to justice. There’s lots of non-disclosed money floating overseas and if you are not sure how you can be affected, you need to contact a tax attorney before speaking with your CPA. Why? Because CPA’s do not fall under client attorney privileges in Federal court.
If you have questions reach out to Jason Kovan, our Managing Tax Partner. Prior to founding TaxLawNow and Expat Tax Partners LLC, Jason was an Executive Tax Director with KPMG serving individuals and corporate clients throughout the world.
Jason is a Phi Beta Kappa graduate from Purdue University, and holds a JD and MBA from Washington University in St. Louis. Jason also holds a Masters in Tax (MST) from Golden Gate University. Jason is a member of the Florida Bar, South Carolina Board of Accountancy, and is also a Florida licensed private investigator.