The Internal Revenue Service announced in Washington yesterday that it continues to see a “strong response” to its Offshore Voluntary Compliance Initiative (OVCI), with more than $75 million in taxes collected to date. It also indicated that more than 400 offshore promoters have been identified.
OVCI was designed to bring taxpayers who use offshore payment cards or other offshore financial arrangements to hide income back into compliance with U.S. tax laws. Taxpayers were given until April 15, 2003, to apply.
Reports are that the IRS received OVCI applications from some 1,299 taxpayers – from nearly every state and from 48 other countries.
The agency still is processing many of these applications. However, current results show:
· Taxpayers have paid more than $75 million in taxes to the programme.
· The $75 million figure will continue to grow because most taxpayers accepted into the programme have until October 15 to amend their tax returns and pay back taxes.
· OVCI applicants identified more than 400 offshore promoters. Of these, 214 promoters were previously unknown to the IRS, which it says helps its efforts to counter offshore tax evasion.
· While the programme has led to $75 million in taxes collected, the cost of OVCI to date is estimated at $2 million.
OVCI Applicants were required to provide full details on the person or persons who promoted the offshore arrangements. Although eligible taxpayers could avoid criminal prosecution and certain penalties, they still would have to pay back taxes, interest and some penalties.
**Offshore Credit Card Programme**
The IRS points out that OVCI is just one part of its on-going, multi-pronged effort to counter offshore tax evasion.
A related, but separate component of the effort is the Offshore Credit Card Programme (OCCP). This stems from the John Doe summons investigation. Since October 2000, the IRS has issued a series of summonses to a variety of financial and commercial businesses to obtain information on U.S. residents who held credit, debit or other payment cards issued by offshore banks. Investigators have been using records from the John Doe summonses to trace the identities of people whose use of these payment cards may be related to hiding taxable income.
To date, OCCP has produced the following results:
· About 2,800 tax returns are under audit or already have been completed, with expectations that this number will continue to grow.
· The vast majority of these taxpayers remain in the audit process, and taxes have not been assessed on these cases as yet. So far, more than $3 million in taxes has been assessed. This number also is anticipated to grow in the future.
· Dozens of cases already have been referred to Criminal Investigation for possible action.
The IRS intends to continue working on its OVCI and OCCP programmes. It has stated that as part of this process it will continue its work to identify and pursue civil and/or criminal penalties against those engaged in improper offshore transactions.
*”We have a multi-pronged approach on offshore tax evasion, and we will continue to aggressively pursue this issue,”* said Bob Wenzel, IRS Deputy Commissioner for Services and Enforcement. *”Our continuing efforts send a strong signal to offshore tax evaders and others considering hiding their money overseas.”*