by Brian Mahany
“Putting a large dent in offshore tax evasion” – IRS Commissioner Doug Shulman used those words this week in remarks to the National Press Club. His message, however, is misses the mark.
Shulman claims the IRS has made tremendous inroads against offshore tax evasion yet cites the statistics from the recent offshore amnesty programs. While tax evasion is a problem, we believe most people with unreported offshore bank and other accounts either don’t know of the reporting requirements or received bad information from preparers.
While his remarks about Swiss banks turning over bank records may have some relevance to tax evasion, his comments seem to lump together the true criminals with the innocent foreign account holders and businesses that legitimately take advantage of doing business in multiple jurisdictions.
Shulman took the opportunity to address increased audits of businesses doing business internationally. In recent years the IRS has focused on international transfer pricing issues within the business community. The perception is that businesses somehow cheat the government by moving profitable operations to low tax countries. The arena is so complex and rules so nebulous, however, that the IRS has lost many audit assessments when challenged in tax court. If the IRS can’t get it right, how can businesses be expected to do so?
This post isn’t intended on being critical of the agency. It is a warning to not vilify honest taxpayers with legitimate offshore accounts and companies doing business outside the U.S. We are clearly living in a global economy – Congress and the IRS needs to do a better job of separating those who intentionally evade taxes from those who simply don’t know or understand the ever changing rules.
The tax lawyers at Mahany & Ertl concentrate in international tax reporting issues. Unfiled FBARs, the new FATCA requirements, offshore tax amnesty (OVDI) and transfer price audits – we can help. For more information contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at All inquiries are protected by the attorney client privilge and kept in strict confidence.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. IRS services available worldwide.