US Crackdown on Offshore Tax Evasion

According to a brand new report issued by the IRS in America this week, the misuse of offshore tax havens and structures by some of the most wealthy and influential people in the United States is costing the US government up to seventy billion dollars annually and apparently there is a growing industry committed to assisting those who wish to evade tax by going offshore.

While there is absolutely no question about the absolute legality of the major offshore tax havens and investment structures, it is the misuse and abuse of such havens and structures by those who are not legally entitled to the benefits and gains they offer that the IRS have been questioning in their report…however, some of the offshore advisories named in the report refute the IRS’s claims stating that their reporting is one-sided – we take a closer look…

The ‘Offshore Abuses: The Enablers, the Tools and Offshore Secrecy’ report by the IRS to the Senate Homeland Security and Governmental Affairs Committee was presented on Tuesday the 1st of August and it was collated following a year of research into the actions of certain individuals, companies and offshore tax havens such as Belize, the British Virgin Islands, the Cayman Islands, the Isle of Man, Nevis and Panama. 

These havens were selected because they are considered to be reputable by the majority and yet they have many layers of legislation and laws that provide superior secrecy to those who form companies and trusts or who bank, invest or even do certain business in the jurisdiction.

The report did not set out to name and shame certain individuals; rather it was prepared to highlight the extreme difficulties that the US tax authorities have when attempting to crackdown on offshore tax evasion.  According to the IRS Commissioner Mark Everson, the main issue the authorities are facing is one of ‘honesty of reporting’ – it seems that where someone believes they can get away with being less than honest they will try it!

One particular company cited in the report, Quellos Group, LLC which is a ‘financial boutique’ working for clients who require integrated financial solutions, claimed that the report was one-sided, unfair and inaccurate – some of the individuals mentioned in the report are going to have their say in front of the Senate in due course and it will be interesting to learn what their thoughts on the matter are!

One thing is for certain however, the US government is cracking down on offshore tax evasion and the findings of the IRS report ‘Offshore Abuses: The Enablers, the Tools and Offshore Secrecy’ will help the tax authorities to get the tools and strategies in place to catch more people who attempt to illegally exploit the offshore advantages which are only legitimately available to a few.

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