IRS Targets Groups of Taxpayers for Tax Avoidance and Evasion

The IRS is taking tax evasion more seriously than ever in connection with FATCA and is now targeting entire groups of taxpayers in connection with non-compliance.

Tax compliance is a serious issue, and with the recent FATCA updates, the government is more thorough than ever before in identifying non-compliant taxpayers among individuals who live overseas. In past years, taxpayers who were suspected of fraud were primarily targeted for investigation on an individual basis. Now however, the IRS is going after entire groups of people who are suspected of non-compliance.

John Doe Summonses Approved

A recent example of this is when a federal judge approved the IRS issuing a John Doe summonses on FedEx, DHL, UPS, and other Bitcoin-compliant shipping companies to provide information regarding clients of Sovereign Management & Legal Ltd. Sovereign Management and Legal Ltd is suspected of helping U.S. taxpayers living abroad avoid taxes. The summonses enable the IRS to gather the names and information of U.S. citizens who used FedEx, UPS, and DHL to communicate with Sovereign Management and Legal Ltd and Western Union to transfer funds in order to determine the identity of unknown persons who might be avoiding U.S. taxes.

This recent act shows that the IRS is more serious than ever about identifying individuals who are avoiding U.S. taxes. The John Doe summons now allows the government to secure names and information on an entire group of taxpayers rather than just one or two individuals at a time. Each summons must be approved by a federal judge, but the precedent has now been set and may continue if the summonses prove to be successful.

Voluntary Disclosure Options

The U.S. government has provided taxpayers with multiple ways to disclose unpaid taxes in a way that reduces penalties and the chance of facing criminal charges. Through the Offshore Voluntary Disclosure Program (OVDP) taxpayers can disclose foreign accounts and assets and agree to pay all back taxes in full in addition to applicable penalty fees including a 20% fee on the full amount owed and an additional fee based on the total of the largest offshore account up to 50% in some cases. However, once all taxes and penalties have been paid, the individual is protected from further criminal charges.

Another program available to U.S. taxpayers living abroad is the Foreign Streamlined Program. Under this program, individuals must certify that their behavior was non-willful and must meet specific eligibility criteria. Once approved, taxpayers within this program are not help subject to further financial penalties.

If you suspect you owe additional taxes to the IRS regarding overseas accounts, it is important to seek professional legal guidance from a tax attorney. A tax law firm can represent clients before the IRS and assist with submitting all necessary documentation for OVDP or Foreign Streamlined Program.

About Freeman Tax Law

Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.

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