U.S. Tax-Evasion Probes Said to Slow as Prosecutors Transfer

The U.S. Justice Department has lost almost 30 percent of its tax prosecutors in the past month, slowing a U.S. crackdown on offshore banks that enabled tax evasion, according to four people familiar with the matter.

Two sources.  Bloomberg Story and this from Mainjustice.com

In usual fashion, I could not help but comment on the Bloomberg story.  Here is what I wrote…

Interesting story.  Thanks David.  Maybe they went into private practice where they can make more money advising those that they were pursuing?? The private sector pays better, so that would be a rationale decision.  Just like the special forces leave the Marines to get jobs working for Private Security Contractors!

Another aspect might be, that a significant portion of 30,000 that entered the IRS VD programs that supposedly avoided criminal prosecution were Minnows and not the Whales the IRS was targeting. Maybe the insights they are gaining for new prosecutions of Whales or Banks are not as fruitful as they thought?  No one in the media is yet asking for any statistical analysis of who the IRS is netting. Everyone just accepts their declarations of success.

I have a laundry list of questions I would like answered, but if I were only allowed to ask three, these would be them…

1.  What is the Minnow to Whale ratio in your voluntary programs?

2.  Of revenues collected, what is new taxes and what is the FBAR or “in lieu of” penalties?

3. How many of those that joined came from offshore addresses and not the Homeland for which these programs were designed?

Maybe you could ask these next time you get a chance to interview those at the IRS in charge of their programs. Thanks

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14 thoughts on “U.S. Tax-Evasion Probes Said to Slow as Prosecutors Transfer

  1. @Tiger…

    You should see the list of questions I really have. LOL. I could make an entire post out of them.

  2. To the list of questions you may want to add
    How many of these are from immigrants who had assets before coming to the US or inheritance?

  3. @ Kumar… That is on my larger list. Maybe I should have made it 4 questions! But… you know, you could go and add that question as a comment too. Wouldn’t hurt for others to raise them in a public format. I always try to do that, when the journalist just repeat the “success stats” that the IRS puts out. More they hear others questioning their scribe reporting, the more the chance that someday a question will actually be raised. You can create the same Kumar alias there too.

    BTW, ACA did a freedom of information request, that I understand the IRS says they have no data on 2 and 3… However, I can’t believe that when they put out data in the reports below which I am still digesting to see if it is worthy of a post…

    The IRS has published a new data book, the 2011 Data Book, here,

    The table of most interest to the readers is Table 18, titled Criminal Investigation Program, by Status or Disposition, Fiscal Year 2011. A separate pdf of that table is here.

    For past IRS Criminal Investigation statistics, see here, with further links to more detailed statistics.

    Source for the above was Jack’s blog

    I am sure there is some good information in here to ponder. @Eric, @Tim, @Renounce seem especially good at that, so hoping this will tweak their interest.

  4. I would love to see a whistle blower blow the whistle on the Justice Department and the IRS. That would take balls or a bit of insanity … here’s hoping there’s someone crazy enough to do it.

    Maybe most of their so called victories are against innocent immigrants who had accounts back home with no illicit purpose.

    If they were catching real whales purposely trying to evade taxes in this program, they wouldn’t be able to justify moving 30% of the staff to other jobs. I smell a cover up.

  5. I am becoming convinced this whole thing with “offshore” tax is a lot more complex than its made out to be. One thing I’ll note is that Canada’s CRA has almost shutdown completely its offshore investigations according to some sources. Notably Gail Shea Canada’s Minister of Revenue came out of few days and basically said the vast majority of Canadians with foreign accounts are reporting any income tax due correctly. One thing I’ll note is the disclosure requirements are far less onerous in Canada than in the US. All have you to do is say how much in assets you have in particular geographic region say such as Europe and then report the amount of income at the top of your T1 return. Immigrants are also I big political force especially in determining tax policy in this area.

    My feeling is much the angst about “offshore” accounts has more to do with other things people do with them such as to screw spouses and business partners(in Canada suspect these are the most common reasons). This same angst and need for societal control doesn’t exist in Canada for a lot reasons. For example it is widely known that many people involved in illegal businesses such as prostitution in Canada actually file proper taxes and collect GST on their “services” while CRA quietly collects the crown’s tax without notifying the police. The fact Canada’s national police force, the RCMP is involved in endless sex scandals right now(such ones where senior RCMP officer were forcing junior female subordinates to have sex in the back of police cruisers) doesn’t exactly help Canadian law enforcement’s moral authority.

  6. @Tim
    ‘it is widely known that many people involved in illegal businesses such as prostitution in Canada actually file proper taxes and collect GST on their “services” while CRA quietly collects the crown’s tax without notifying the police’. Absolutely correct, about 15 years ago I had a client who was “an escort”. I often wonder what happened to her.

  7. See this is what I love about Canada. Even the so called bad guys (or girls) pay their taxes. That’s why it really pisses me off when the Americans call us tax cheats.

    Even our hookers pay all their taxes, leave Canada alone and pick on somebody who’s actually doing something wrong.

  8. @omg
    An interesting aside to the above, was when I got to the part of the interview where I had to ask ‘what her business was’. Their are various codes on the self employed tax schedule for various types of work. I think I classified her self employment as ‘entertainment’ business. That was about as specific as I could get.

  9. I used to work at an electronics company and we had a clerk who also worked as a stripper full time. She wore fishnet stockings to work.

    She obviously made alot of money at her night job and we asked her why she would bother going to work 5 days a week in an office when she could make the same amount in 1 night. She said she needed the extended healthcare. This was about 23 years ago.

  10. @tiger

    I have heard of people in the “entertainment” business that successful claimed GST input tax credits for their work related clothes and “cosmetic surgery” (I think you know what I am talking about)

    I think the issue in some ways is America is very puritanical society and always has been. Its not about whether people pay tax on offshore income its about the fact that many Americans don’t the idea of people having foreign bank accounts or even living outside the country. Canada of course is far less puritanical maybe even too far in the other direction where people get away with “white collar” type criminal activities that they shouldn’t.

    I always love looking at the write-ups Maclean’s magazine does of these various special interests that wine and dine our MP’s at the Chateau Laurier Hotel in Ottawa. If similar events were happening in DC it would be an absolute national scandal(Despite the fact it does happen in DC behind closed doors in Canada at least they let the media in).

    Alcohol most definitely is being served at all of these events:

    http://www2.macleans.ca/2009/12/01/mps-and-miners/
    http://www2.macleans.ca/2010/04/13/pharmaceutical-companies-host-on-the-hill/

    http://www2.macleans.ca/2010/04/08/mps-herd-over-to-eat-beef/

    http://www2.macleans.ca/2009/11/03/mps-check-out-sustainability-and-dj-beats/

  11. @Tim

    I definitely know what you are talking about. And you are correct. There were medical expenses for ‘cosmetic surgery’ for my client.

    Thanks for the links to the macleans articles.

  12. IRS 2011 Data Book –

    Notice that the “Other” category in Table 3 = U.S. Territories, U.S. Armed Service members overseas, and international.

    For 2010-2011, there were 1,620,363 individual 1040-series returns filed. Factor out the territories and the military. Set alongside estimate of 5 to 7 million extraterritorials. Probable current compliance rate of less than 1 in 10 for international?

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