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Joint Chiefs of Global Tax Enforcement Work Together to Investigate a South American Financial Institution

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    Most, if not all, of our blogs have focused on either the federal or state taxation on individuals and businesses. We have brought our readers several stories that highlight the cooperation between federal agencies, as well as state and federal taxing authorities. But this story is unique in that it discusses the cooperation among five different countries, working toward bringing a sole taxpayer to justice in all five of their jurisdictions. Although it may sound foreign now, similar international cooperation is expected to become more prevalent as time goes on

    See our Criminal Tax Law Q and A Library 

    According to multiple news outlets, the Joint Chiefs of Global Tax Enforcement (better known as the “J5”) recently held a “coordinated day of action”. As a part of the J5’s 24 hours of concentrated tax enforcement, the group worked together to comb over intelligence data, evidence, subpoenas, and warrants, related to a South American financial institution that is thought to be involved in the illegal activity described in the Panama Papers. Even though the investigative effort was on a worldwide scale, the financial institution was not named. But it is thought to have committed tax crimes in all five J5 countries. 

    The J5 is made up of criminal tax investigation agencies from the United States, United Kingdom, the Netherlands, Australia, and Canada. The IRS Criminal Investigations group represents the U.S. and a representative of the J5 indicated that the coordinated effort by the group would be the first of many. 

    How did the J5 come about and what do they do?

    The J5 is a relatively new body, formed in 2018 to help combat global tax evasion. In addition to tackling issues that the IRS and other taxing authorities consider critical, such as failure to disclose foreign bank accounts and tax evasion, the J5 has met on topics such as the future of the taxation of cryptocurrency and how to prevent its use to further tax evasion

    What does this mean for U.S. taxpayers?

    There are a plethora of tax laws involving a U.S. resident’s overseas activity, including foreign bank account reporting (FBAR) laws, tax evasion involving more than one nation, and more complicated financial schemes that have large tax implications in various jurisdictions. Taxpayers that believe that they could be caught up in a tax crime should be aware of not only the J5, but the very capable IRS Criminal Investigations group.

    It is easy to get caught in an international tax trap. What should you do if you are?

    Even those taxpayers who do not believe that they have done anything intentional to violate U.S. or international tax laws should consider their international activity. Many taxpayers who are noncompliant with tax laws involving foreign financial activities are not aware of their legal obligations, or simply choose not to attempt compliance. Those taxpayers also frequently find themselves in hot water with the IRS. Although there is a willfulness requirement to prove intent for many crimes, the willful disregard for the tax law is generally not a defense.

    Regardless of whether you believe that you are not in compliance with FBAR or other tax laws that are aimed at international affairs or whether you have assets or businesses in other countries and are not aware of your tax obligations, it is in your best interest to contact an experienced international tax defense attorney to discuss your particular situation and options to become compliant. 

    See our 2011 OVDI Q and A Library 

    See our FBAR Compliance and Disclosure Q and A Library  

    See our Foreign Audit Q and A Library 

    Contact an Experienced International Tax Defense Attorney Today

    The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.  

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