On June 5th, a number of IRS and DOJ representatives made presentations at the NYU's Tax Controversy Forum in New York. The following were of interest.
- The IRS is continuing its focus on offshore activities, including offshore accounts and entities. The IRS and Department of Justice have entered into agreements with a number of foreign financial institutions, including banks in Switzerland and Israel. Under the terms of the agreements, the financial institutions are required to cooperate and provide information to the Department of Justice and IRS regarding accounts that may have US beneficial owners. In cases where accountholders have not executed waivers of Swiss bank secrecy, cooperating banks are taking a liberal view of what they can provide to the Department of Justice to identify the US accountholders.
- The IRS and Department of Justice will be mining data received from cooperative foreign banks, voluntary disclosures and other investigations to determine which countries to target next in the offshore compliance initiative.
- The IRS and Department of Justice will also be reviewing information they have received to identify taxpayers who are not in compliance or have attempted to make a quiet disclosure. In addition, the information will be used to uncover willful conduct by taxpayers who have filed in the IRS Streamlined Filing Compliance Procedure.
- The IRS and Department of Justice are aware of an arrangement in which a taxpayer purchases a life insurance policy that has foreign investments. The taxpayers does not disclose the existence of the LI policy because the taxpayer does not have a direct foreign investment.
- Employment Taxes and employment tax fraud are a high priority for the IRS and Department of Justice. Businesses who are not turning over withheld taxes will be scrutinized by the IRS. Looking for businesses that rack up multiple quarters of underpayment and/or taxpayers who run up significant payroll tax liabilities for multiple companies. Also of interest are employees who are being paid cash under the table, most likely illegal aliens.
- The new IDR process seems to be working well for the IRS and taxpayers as it has resulted in more collaboration prior to the issuance of IDRs, including efforts to refine IDR requests and discussion regarding realistic response dates. As a result, there has not been a large increase in summons enforcement proceedings resulting from the new IDR process.
- Other priorities are identity theft, and structuring of cash deposits and withdrawals.