U.S. taxpayers who entered into an IRS program that made it easier to disclose their hidden offshore bank accounts may have thought they put their legal troubles behind them. Instead, prosecutors may try to put some of them in jail for not telling all.
Since 2012, 30,000 Americans avoided stiff tax penalties by declaring they had innocent reasons for failing to disclose offshore holdings. But under the program they received no guarantees that they wouldn’t be prosecuted in the future. And now the Justice Department and the Internal Revenue Service are combing through thousands of secret records obtained from 80 Swiss banks to determine whether the taxpayers were truthful.
We’re “taking all of that data and scrubbing it for leads,” Nanette Davis, a trial attorney in the Justice Department’s tax division, said at the New York University Tax Controversy Forum last week. The effort has been fruitful already, she said. With some taxpayers, “we say ‘we could indict this case tomorrow,”’ said Davis, who is overseeing the review.
Those statements might have “a chilling effect” on people considering using the streamlined program, said tax attorney Barbara Kaplan, of Greenberg Traurig LLP. That “undermines the IRS interest in bringing as many people as possible” into tax compliance, she said.