IRS Focus On Offshore Tax Non-Compliance

The Internal Revenue Service (IRS) has been ineffective in its collection of unpaid taxes from international U.S. taxpayers, according to a report published on September 30 by the Treasury Inspector General for Tax Administration (TIGTA). The report is the result of an audit conducted by TIGTA into the current effectiveness of the IRS’s efforts at stopping offshore tax non-compliance, and it found several significant procedural and management flaws in IRS procedure. In the report, TIGTA points to a lack of oversight of the international tax collection division of the IRS as a source of inefficiency. Most prominent in its discoveries, TIGTA found that the division did not have a process in place to prioritize significant cases, or a process to decide whether to issue a customs hold on a taxpayer. Also troubling was the report’s finding that the international collection division does not possess accurate statistics on neither the noncompliance rate of international taxpayers nor the success rate of the IRS’s own collection efforts. The report concludes by making seven recommendations for the IRS to implement going forward, mostly aimed at formalizing more institutional processes, with the intention of empowering the division to focus on more important cases and more frequently use available tools of enforcement. The release of this report is an indicator of the growing focus the IRS is placing on enforcement of offshore tax non-compliance. If you have an unreported offshore income, assets or financial accounts, contact the experienced tax attorney at Daniel Rosefelt & Associates, LLC, Attorney & CPA to discuss your legal options.