Secret, Hidden Money Provides Fodder for IRS Efforts
Everyone wants to keep their money hidden from the taxman, but a recent study shows that the world’s wealthiest are doing that pretty well.
Offshore tax havens are claimed to be the home to as much as $32 trillion. That’s an astonishing amount of money that leaves governments with a $2,800 hole of lost income tax revenue per taxpayer.
Whether it’s $32 trillion isn’t certain. The study by the Tax Justice Network, using information from the World Bank, International Monetary Fund, the United Nation, and central banks, pegs the figure at somewhere between $21 and $32 trillion.
If you think the IRS isn’t taking a second look at studies like these, think again. Increasing the reporting of hidden overseas financial assets by American citizens is now one of the IRS’s top goals.
After collecting more than $4 billion over a three-year period from taxpayers with offshore tax havens, the IRS indefinitely extended its once temporary Offshore Voluntary Disclosure Program.
The program, originally implemented in 2009 and 2011, became highly popular and very successful. In short, it provides decreased penalties for those who report their hidden overseas accounts, and pay the appropriate taxes.
Some developing countries may want to follow the IRS’s lead. The study notes that the wealthiest citizens of nearly 140 developing countries amassed upwards of $9.3 trillion in hidden overseas tax havens by 2010.
But while the tax man in developing countries may need a head start, the IRS already has a leg up. Aggressive – and incentivized – efforts to make taxpayers report their overseas accounts are now a part of the IRS’s legal playbook.
Working with a tax professional can help you navigate the IRS’s maze of rules and regulations and bring your overseas or domestic back tax debt into a manageable situation.
The money saved in reduced penalties and interest can help pay for a visit to a different kind of overseas haven.
Sign up for our newsletter and be the first to find out when exciting IRS news happens. Yes, exciting. We're really into taxes.