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It takes the offer of amnesty to get rich people to reveal their offshore bank accounts. Finally, after years of neglect, the IRS has actually bothered to look into all this. But they had to assure the oligarchs that they wouldn’t be prosecuted for tax evasion, of course.
More than 12,000 American taxpayers have voluntarily revealed their secret offshore bank accounts to the Internal Revenue Service as part of the government’s latest tax amnesty program, agency officials said on Thursday. The move will allow the United States Treasury to collect at least half a billion dollars in unpaid taxes.
The voluntary disclosure program, which was in effect from February until last week, is part of an initiative to deter tax evasion via offshore bank accounts. Since the I.R.S. began its previous amnesty program in 2009, more than 30,000 taxpayers have reported their secret overseas accounts, and the federal government has collected $2.7 billion in taxes and penalties.
I mean, this is fine. It’s better than simply allowing offshoring to continue unchecked. At the same time, $2.7 billion is a pittance compared to the total lost revenue from tax evasion, and 30,000 tax evaders probably a small percentage of the total. And this setup where you can receive amnesty by declaring your offshore account is really distasteful. There are somewhat legitimate penalties on the financial side, however. Those who declare offshore accounts have to repay up to eight years in back taxes, and a penalty totaling 25% of the highest balance in the account.
With the amnesty program done, wouldn’t it proceed that those who have yet to declare offshore accounts now face stringent prosecution? Apparently a lot of the hidden assets just moved away from Switzerland to Asia. This is always going to be a game of whack-a-mole. But I believe the US has a modicum of global power, and given the budget hysteria in Washington, this seems like an excellent way to use it. I haven’t seen a better idea for deficit reduction than “collect the taxes actually owed.”
More from Atlantic Wire.
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As you mentioned I think a lot of these funds were in Swiss accounts, and the US has had considerable success in pressuring UBS and Credit Suisse to turn over information about U.S. account holders. Given the difficulties of prosecuting all these people I think some sort of amnesty was reasonable and this can be tallied as an Obama success, although much of the groundwork was laid during the Bush administration.
Could any of our politicians and their cronies have offshore accounts – not just to save taxes, but to hide bribery?
Look at this, from Reuters:
“The U.S. pursuit of offshore tax evaders is widening to include Israel, where U.S. authorities are scrutinizing three of Israel’s largest banks over suspicions their Swiss outposts helped American clients evade taxes, people briefed on the matter said.
“The banks under scrutiny by the U.S. Justice Department’s criminal tax division are Bank Hapoalim, Bank Leumi le-Israel BM and Mizrahi-Tefahot, the sources said.”
But David, their wealth makes these job creators by definition. Going after them would be bad for the economy!!
Except that many completely normal, law-abiding people are being dragged into this… My mother has been a dual Canadian-American citizen for more than 30 years, living in Canada the entire time, and has paid every last cent owed in taxes (at a higher rate in Canada no less). Now the IRS thinks they can go after her assets just because it’s the only country in the entire world that requires ex-patriots to files taxes.
Aren’t they referred to as “Politically Exposed Persons”?
I just WISH I was ONE of these people.
Soooooo if I don’t pay my taxes the IRS will send me to jail. But if I’m rich and don’t pay my taxes they come asking, no…, begging me to pay them. And I only have to pay about 1/5th or less of what I owed them. Must be nice to be rich, to have no worry. Hell, you can blatantly break the law and apparently thats not a problem at all.
Great update, thanks Mr Dayen.
Sadly, tax payers offshore accounts are a drop in the bucket revenue wise compared to corporations tax streams that are not being collected.
At least, I’d expect that to be true . . . any Pups that can confirm my posit?
Deficit shmeficit . . . tax the rich feed the poor bring the troops home n close the bases.
Spend that money to create jobs n budget will balance fast.
LeSigh, to dream the impossible huh.
I got to see this travesty up close in April. My wife and I were invited by my mother-in – law’s man friend a wealthy retired OIL exec. to take a trip to the Bahamas on his 70 ft. Yacht ( American registered) out of West Palm. In the dock there were 5 or 6 super yachts all over 250 ft. and everyone one was registered in the Caymans, but were all owned by American tycoons. I asked our host why he hadn’t done the same thing to save on the licensing fee? His answer was he felt he had a duty to license it in the U.S. since that’s where he lived and he felt it was wrong of the U.S. Gov’t to allow these other tax evaders to do other wise. By the way he’s no liberal to the contrary he’s a Conservative but even he was embarrassed by how blatant these people were.
a bit of nonsense or rather exaggeration to think that the rich are really getting dinged by this program. My tax background convinces me that the rich have always and will always act to spend $2 in order to deny the government $1 of tax – stupid – but that is the way they think.
The Gov announces that a given country will reveal secret bank accounts – so ok, the rich confess to having those bank accounts – BUT ONLY in that named country. Money is moved to other countries – like Panama if Obama gets his new treaty approved that provides by law that the IRS can not ask or receive Panamanian secret banking information.
The very rich fellows do not even blink an eye as they know their lawyers will have done some back to back transactions that make the money trail hard to trace – secret banking data is just not enough – and the money is now his in partnerships and corporations whose ownership will not be trace without massive effort and subpoena powers. And they know they had Bush and the GOP cut the large case manpower in half and have them reassigned to checking earned income credit fraud where the average recovery is $500. And they know that Obama and Timothy Geithner have refused to increase the manpower the IRS puts on major corporate and rich person cases to the Bill Clinton level (Clinton was too anti-business and the rich you know). Heck, the IRS does not even know about 2/3rds the assets of the super rich and their trusts.
Capone was done in on an IRS living style costs versus income reported concept proof of tax evation – the super rich can live very nicely on one billion while hiding the family trusts that hold another 10 billion.
Got a link for that Panamanian bank treaty? Not doubting you, just want the link for more info and to be able to support my claim when I make it certain associates.
Actually there are more people in prison for violation of the Mann Act (the law criminalizing taking a person under 16 years old across a state line for sex) than are in prison for tax evasion.
The IRS realizes that they won’t get squat from someone in prison, so they plea deal down to basically whatever the evader can convince them he/she can pay.