With less than a week to go before Tax Day, the Department of Justice sent a message to would-be tax criminals Tuesday: we’re onto you, and “time is running out” to turn yourself in.
Assistant Attorney General for the Tax Division Kathryn Keneally told reporters Tuesday that the department and the Internal Revenue Service are getting lots of leads from the IRS’ Offshore Voluntary Disclosure program, which allows individuals to avoid significant civil penalties and criminal prosecution in most cases if they come forward to disclose their previously unreported offshore accounts.
“Over 38,000 people came forward and described what they did with their offshore bank accounts,” Keneally said. “There is a wealth of information in those disclosures, and both we and the IRS are using that information to expand outward.”
Keneally added that said tax cheats may be waiting for a high-profile case to gauge what the department knows and is pursuing — and that, she warned, would be a mistake.
“There’s one message I want to get out there on the offshore bank account issue: It is that time is running out, and anyone who is still waiting should come forward,” she said. “Because if anyone is waiting for a news announcement that makes them think, ‘Oh, they’re finally onto my country and now I should report’ — by that time, it may be too late.”
Under the rules of the program, once the department has started to investigate an individual the protections afforded by self-reporting are voided, even if the person comes forward without knowing they are the target of an investigation.
A 2008 report by the staff of the Senate Homeland Security Permanent Subcommittee on Investigations, “Tax Haven Banks and U.S. Tax Compliance,” found that more than $100 billion in U.S. tax revenue is lost to secret offshore accounts each year.
Department attorneys recently prosecuted cases involving accounts in Switzerland, India and Israel. Keneally was coy about their next target.
“For anyone who’s going to ask the question, what countries are next,” she said, “the answer is all of them.”
Keneally said the department is also pursuing fraudulent tax return preparers and perpetrators of refund identity theft.