Foreign bank and financial account reporting now comes under the authority of the Internal Revenue Service as a result of a “Memorandum of Agreement” with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The agreement is the latest step in ongoing efforts by the IRS to identify undisclosed overseas accounts. The IRS now has oversight for Foreign Bank and Financial Account Reports (FBAR), required to be filed by individuals who live and work in the US for all foreign country financial accounts that exceed $10,000. Persons failing to file such reports can be punished under civil and criminal law. FinCEN says that oversight of FBARs within the IRS is a natural fit that “should enhance compliance and enforcement.” The mission of the Financial Crimes Enforcement Network itself is to support law enforcement investigative efforts and foster interagency and global cooperation against domestic and international financial crimes. It provides U.S. policy makers with strategic analyses of domestic and worldwide money laundering developments, trends and patterns. A provision of the USA PATRIOT Act requires the Secretary of the Treasury to study methods to improve compliance with reporting requirements. The agreement delegating FBAR enforcement to the IRS grew out of this effort.
Last week saw the ending of an amnesty period launched by IRS to encourage the voluntary disclosure of unreported income by people who used offshore financial arrangements to avoid tax.
As part of a comprehensive strategy to ensure all taxpayers pay their fair share, the Internal Revenue Service and the US Treasury Department are moving aggressively to combat abusive tax avoidance transactions and eliminate tax shelters. The IRS conducts promoter examinations in instances where a promoter has not complied with regulations requiring identification of potentially abusive tax avoidance transactions by registering such transactions, and maintaining or making investor lists available to the IRS upon request.
The Office of Tax Shelter Analysis (OTSA) provides centralised data collection and analysis on all aspects of the tax shelter program. Last Week, Treasury Assistant Secretary for Tax Policy Pam Olson said *”The IRS is building an enforcement web to catch and eliminate tax shelters. Taxpayers should come forward now, before they get tangled in the web. The IRS is collecting information about taxpayers and promoters who don’t come forward so it can act on that information. It’s time to come in from the cold.”*
See link below for more information on IRS actions involving abusive shelters and transactions.