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The Following is a copy of US IR-2003-58 dealing with the "waiver of =
extreme penalties" for those who came forward voluntarily and filled in =
their 3520 and 3520A forms for their foreign trusts.
The penalties are not little. Failure to report one account to the =
Department of The Treasury could result in a fine of up to $500,000 PLUS =
up to FIVE YEARS IN JAIL per account.
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Sent: Thursday, May 01, 2003 12:38 PM
Subject: IR-2003-58 -- EARLY DATA SHOW STRONG RESPONSE TO OFFSHORE
INITIATIVE; APPLICANTS OWE MILLIONS, REVEAL SCORES OF PROMOTERS
WASHINGTON:=20
The Internal Revenue Service announced today the recently
completed Offshore Voluntary Compliance Initiative led to more than =
1,200
people stepping forward to participate. A partial analysis of some of =
the
cases has already identified more than $50 million in uncollected taxes
and 80 new offshore promoters.
"This is a strong response to the offshore program,=A8 said acting IRS
Commissioner Bob Wenzel. People with multi-million-dollar tax bills came
forward, and they identified scores of new promoters of offshore tax
schemes for further investigation. This effort sends a powerful signal =
to
offshore tax evaders still out there and others considering hiding money
overseas.=A8
Taxpayers faced an April 15 deadline to apply for the Offshore Voluntary
Compliance Initiative (OVCI). The initiative was aimed at bringing
taxpayers who used offshore payment cards or other offshore financial
arrangements to hide income back into compliance with the tax laws.
The OVCI deadline brought a flurry of last-minute filings. The agency =
has
had a chance to review only a portion of the filings so far, but the
preliminary analysis reflects the program's success:
In all, 1,253 taxpayers from 46 states and 48 countries applied for
OVCI. Florida led with 141 applicants, followed by California with 115,
Texas with 71 and New York with 47. The applications covered more than
3,500 tax years.
After reviewing some of the initial cases, at least $50 million in
uncollected tax has been identified. When the rest of the cases and
related amended tax returns are factored in, the IRS expects the amount =
of
tax to surpass $100 million. A number of the cases involve taxes =
exceeding
seven figures.
In the first 229 OVCI cases reviewed, taxpayers identified 107
different offshore promoters. Of these, the IRS identified 80 new =
promoter
cases, which carry significant potential for future agency efforts to
track down offshore tax evaders.
"We are discovering a gold mine of information,=A8 Wenzel said. "We are
gaining a substantial amount of insight and information for our agents =
to
use as we continue to build and expand our offshore investigations. This
will provide us with a valuable map to track offshore cheating. The IRS
intends to take full advantage of these leads.=A8
Applicants to OVCI had to provide full details on the person or persons
who promoted the offshore arrangements. Eligible taxpayers could avoid
criminal prosecution and certain penalties but would still have to pay
back taxes, interest and some penalties.
People from all walks of life applied for the program, including =
lawyers,
dentists, business executives, estate heirs and numerous other
occupations. The applicants for the program included people filing =
returns
as individuals, domestic and foreign corporations and trusts and =
estates.
About 240 applicants claimed the offshore promoters scammed them out of
their money.
"Some of these people have learned the hard way it doesn't pay to be
involved in these schemes,=A8 Wenzel said. "A clear lesson emerges from
the offshore initiative. Not only do you run risks violating the tax
law, you risk losing everything you send offshore.=A8
The IRS also believes the increased awareness on offshore issues and the
agency's continuing emphasis on this area will help encourage people to
avoid these transactions in the future.
The strong response to OVCI resulted in large part from assistance from
several key groups. The IRS received help from tax practitioners who
discussed OVCI with their clients. Many states and the Federation of Tax
Administrators cooperated with the effort. In addition, the Senate =
Finance
Committee and others in Congress helped focus attention on the offshore
initiative and other tax scams and schemes.
Now, the IRS moves into the next phase of OVCI. The agency will review =
the
applicants to determine if they are eligible for the program. These
taxpayers will have 150 days from the date they are notified of
eligibility to file correct returns, pay or arrange to pay balances due
and submit other required paperwork.
In the weeks and months ahead, the IRS will be processing and analyzing
these responses from eligible taxpayers. The IRS will also continue its
work to identify and pursue civil and/or criminal penalties against =
those
who:
* Promoted abusive tax avoidance transactions.
* Utilized offshore financial arrangements to improperly avoid tax =
but
did not choose to participate in OVCI.
* Attempted to circumvent the process by submitting amended returns
directly to IRS campuses.
The IRS saw an increase in the number of questionable amended returns
filed during this period outside of OVCI. Although specific numbers are
not available, a number of these returns involved seven-figure tax bills
related to offshore activity.
The IRS continues to work on other elements of the offshore initiative
through 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. The investigation has entailed combing through
data on millions of transactions. In its initial steps, the IRS has more
than 1,000 offshore payment cardholders under audit. Dozens of cases =
have
already been referred to Criminal Investigation for possible action.
"In many ways, our work on this is just beginning. We will continue
aggressively pursuing the offshore cases in the months and weeks =
ahead,=A8
Wenzel said. "For the people who didn't come forward under the offshore
initiative, they're running a real risk.=A8
People who didn't come forward under OVCI still have an opportunity to
make things right with the IRS by filing amended returns or following =
the
terms of the Voluntary Disclosure Initiative, which was outlined in IRS
news release, IR-2002-135.
Additional information on the offshore program and other efforts to =
combat
tax evasion is available on www.IRS.gov under "The Newsroom.=A8
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david ingram comments:
Since 1975 when I saw my first offshore account, I estimate I have come =
across at least 350 people who have lost all their money dealing with =
offshore specialists like Scott Brown and Hoffman who just got caught in =
Tasmania.
those people have included two senators, three members of parliament a =
couple of MLA's (none from BC), and people from every other walk of =
life. A dozen widows have told me that their husbands had a million or =
two offshore that they cannot locate or get at because the offshore =
institution will not recognize them.
In one case a complaint to her member of Parliament resulted in an =
investigation by Revenue Canda and the seizure of the family house =
because the CCRA decided that hubby had hidden a couple of million =
dollars. Wife ended up houseless and penniless while 42 year old husband =
rotted in his grave.
David Ingram of the CEN-TA Group
US / Canada / Mexico tax and working Visa Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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