While many people may think of the IRS as a purely domestic agency, this is far from the truth. Some of the IRS’s most important work involves partnering with the tax authorities from nations around the globe to crack down on U.S. taxpayers who fail to report money or assets and the associated taxable income earned in foreign nations via offshore bank / financial accounts. The IRS also aids other nations in tracking down delinquent taxpayers from their countries trying to use our country’s institutions in order to commit tax fraud.
For the past two years, the tax authorities of a group of five major world powers have been formally working together as part of an international tax force cracking down on tax crimes that cross borders. Our veteran Tax Attorneys at the Tax Law Offices of David W. Klasing have been monitoring the work of this new task force so that we can help our clients with international holdings understand what steps they need to take to avoid scrutiny from the IRS as well as the international community.
What Does this New International Tax Crime Task Force Consist of?
The Joint Taskforce, or J5 as it is usually referred to, began in 2018 as a partnership between the Australian Taxation Office (ATO), the Canadian Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue and Customs (HMRC) from the U.K. and the Internal Revenue Service Criminal Investigation Division (IRS-CI) from the U.S. As noted in a recent article, the group began by “working together to gather information, share intelligence and conduct coordinated operation ”so that each country had a broad view of what was happening globally with their taxpayers.
The countries shared information and were able to open new cases, more completely develop existing cases, and find ways to cut red tape and reduce the time it takes to work cases when multiple international jurisdictions are involved. As a result of years of work and cooperation, the task force’s efforts have recently begun to show results.
One of the most successful aspects of the task force has been what they refer to as “Challenges.” At a Challenge, some of the best and brightest minds from every sector of the participating tax agencies come together for a few days or a week to put their unique perspectives together and work to produce leads and share tools and information related to some element of international tax evasion schemes.
At a 2019 Challenge in Los Angeles, for example, the agents focused their efforts on cryptocurrency and the way it is being used to skirt international tax obligations. An investigation stemming from this collaboration resulted in the arrest of a Romanian man in Germany who admitted to conspiring to participate in wire fraud and offering and selling unregistered securities in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth over $722 million.
What Areas Does the Task Force Focus Their Efforts On?
As noted above, one of the early areas of focus for the task force has been crimes related to cryptocurrency taxes, which often transcend international borders since transactions involving virtual currency are done online and not through any country’s centralized financial institutions. Another area of focus has been a series of investigations in multiple countries into an international financial institution located in Central America, whose products and services are believed to be facilitating money laundering and tax evasion for customers across the globe. The five agencies held an international day of action earlier this year, which resulted in massive sharing of evidence and production of subpoenas throughout the countries. This investigation remains ongoing.
A major effort that the task force has undertaken over the last few years is to make the sharing of information between the countries easier and more organized. Each of the countries has invested in a program called FCINet, a decentralized virtual computer network that lets agencies compare, analyze, and exchange data anonymously. This allows for these organizations to jointly collect data without depositing it in a central database, thereby keeping clear of potential violations of each country’s autonomy and privacy laws.
High-income taxpayers who have failed to report assets and taxable income stashed offshore are the primary focus of the task force’s investigations, those with significant investments in cryptocurrency. Once the task force’s work has led to indictments, the situation is going to be much more difficult to deal with than if you reach out to a skilled Tax Attorney and CPA like those at the Tax Law Offices of David W. Klasing before you get caught. We can work to get you into a voluntary disclosure program where you will likely have to pay back taxes and fines, but will nearly always be given a pass on criminal prosecutions.
If You Are Concerned That You Could be Targeted by the International Tax Crimes Task Force, Call Our Battle-Tested Tax Attorneys Today
Individuals with money in offshore bank and financial accounts, as well as those who deal in cryptocurrency, have a variety of reporting requirements each year, including filing their FBAR to report any offshore or foreign accounts. The IRS has always taken attempted tax dodging by concealing money through crypto exchanges or the use of offshore accounts very seriously. Still, with the help of the J5 international task force, they now have even more information and resources to go after noncompliers.
At the Tax Law Offices of David W. Klasing, our skilled Tax Attorneys and CPAs have years of experience working with those who have made false or misleading statements on past returns to get back into compliance with the most minimal amount of civil penalties and avoiding criminal tax prosecution. To set up a consultation, call us today at (661) 432-1480 on schedule ONLINE today.
Questions and Answers About Foreign Tax Audits
- Does the Fifth Amendment apply to foreign accounts?
- How is evidence cultivated from foreign sources?
- How is tax loss determined?
- How might an FBAR audit be resolved?
- Is a penalty assessment ripe for judicial review?
- Overview of an administrative criminal investigation
- What is the process of an FBAR referral?
- Statute of Limitations raised during a FBAR audit?
- Precautions to be taken in the pre-audit phase
- Recent international tax and reporting prosecutions
- Foreign account, entity and investment prosecution
- Who collects restitution and penalties?
- International tax investigations are an IRS high priority
