What Types of Criminal Investigations Will IRS Target in 2023?

IRS Criminal Investigations

Recently, in July of 2023 the Internal Revenue Service issued a criminal tax press release placing U.S. Taxpayers on notice that the IRS has every intention of pursuing criminal investigations of taxpayers they believe are willfully seeking to evade tax. This specific list provided by the Internal Revenue Service should not be a surprise, as our international tax law specialist team has been writing about these specific issues over the past year based on previous enforcement protocols issued by the US government. The general theme is that wealthy taxpayers and high-income earners are squarely on the IRS’ radar and that the service intends on using all of its resources necessary to pursue taxpayers both domestically and internationally in order to close the tax gap caused by high-income earners and wealthy tax evaders. Let’s take a look at some of the types of investigations the IRS will target.

As provided by the IRS:

Ensuring High-Income Taxpayers Pay Taxes Owed

• • • The IRS is working to ensure hold high-income filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

Making Delinquent Millionaires Pay Up

• • • In just the last few months, we closed about 175 delinquent tax cases for millionaires, generating $38 million in recoveries. This is just the start. We will continue to go after delinquent millionaires as we ramp up enforcement capabilities through the IRA.

Pursuing Tax-Evading Millionaires

• • • In recent months, our Criminal Investigation team has closed a lengthy list of cases where wealthy taxpayers have been sentenced for tax evasion, money laundering and filing false tax returns. Instead of paying taxes, these evaders spent money owed to the government on gambling at casinos, vacations and the purchase of luxury goods. For example, in one case alone the person was ordered to pay more than $6 million in restitution. In addition to this, there are other highlights:

High-Dollar Scheme in Puerto Rico

• • • We recently identified about 100 high-income individuals claiming benefits in Puerto Rico without meeting the residence and source rules involving U.S. possessions. These wealthy individuals are attempting to avoid U.S. taxation on U.S. source income, and we expect many of these cases to proceed to criminal investigation.

Pension Arrangements in Malta

• • • As part of our effort to go after unlawful offshore tactics, IRS and Treasury issued proposed rules in June that define Maltese personal retirement schemes used to avoid U.S. taxes as listed transactions. We are already working to identify taxpayers that are improperly using Malta-U.S. Treaty rules to improperly claim exemptions. The IRA will enable us to forcefully find tax avoiders who leverage these offshore schemes.

Cracking down on millionaire non-filers.

• • • The IRS continues to intensify work around wealthy individuals who do not file tax returns. These are particularly egregious cases where instead of filing their taxes and paying their fair share, these people used the money to make lavish purchases. In one recently closed case, an individual used funds owed to the government to buy a Maserati and a Bentley. We will continue to work with our law enforcement partners to hold these individuals accountable.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist that specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.