It is a fact that generally the rich have more means at their disposal to hide their wealth. The recent standoff between the IRS and UBS bank of Switzerland is a case in point. Many rich Americans held accounts in UBS and other offshore banks with the intention of avoiding taxes on their deposits. But the agreement between UBS and the IRS exposes the details of about 5,000 of such depositors. Under this agreement, UBS will reveal the bank account details of 4,450 of its American clients suspected of tax evasion by the IRS.
After working out this successful settlement to the standoff with UBS, the IRS is not letting up in its quest to further chase down tax cheats. The agency has now set its sights on other wealthy individuals. It has recently formed a wealth unit called the Global High Wealth Industry group under its Large and Mid-Size Business operating division. This unit is tasked with scrutinizing and investigating the intricate methods the rich often use to hide their money in offshore locations. These often come in the form of legal and business entities such as private foundations, privately-owned companies, partnerships and other flow-through entities. Other means include investing in financial instruments and forming agreements like trusts, real estate investments, revenue-based and equity-sharing arrangements, royalty and licensing agreements and the like. While most of these business practices are perfectly legal, but there are some which are a front for aggressive tax strategies.
IRS Commissioner Doug Shulman also stated that the IRS will continue to its international enforcement efforts like increasing its scrutiny of annual Foreign Banks and Financial Accounts Reports (FBARs) besides redefining and further tightening existing FBAR rules.
Besides these, the IRS is also opening up new offices, known as International Criminal Investigation offices, in major cities overseas in their effort to further combat tax evasion. Some of the cities where these offices will be located include Beijing, Panama City and Sydney which be built in addition to its existing offices in cities such as Hong Kong and Barbados. These offices are set up to keep track of the movement of funds across Europe and into Asia.
Who are the taxpayers the IRS is targeting? Of course, the rich but how rich? For now, the IRS is thinking of taxpayers with a net worth of above $30 million.
Could that be YOU?
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Law Offices of Darrin T. Mish, P.A.: Tax Attorney