IRS targets offshore bank accounts Tax Haven Abuse

IRS and treaty partners target Liechtenstein accounts

Mike Habib, EA

An IRS news release reports that IRS is initiating enforcement action involving more than 100 U.S. taxpayers to ensure proper income reporting and tax payment in connection with accounts in Liechtenstein.

Observation: IRS is not alone in raising concerns about such accounts. In a release dated Feb. 21, 2008, Senate Carl Levin (D-MI), chairman of the Senate Homeland Security and Government Reform Permanent Subcommittee on Investigations, stressed the need to end offshore secrecy and tax abuse. His release noted that “Liechtenstein’s LGT Bank, which is owned by the Royal family, has apparently harbored numerous secret accounts which hid the taxable assets of thousands of citizens from around the world.” Levin says he intends to investigate this matter further, and urge the Senate to enact the Stop Tax Haven Abuse Act, which he introduced last year. He notes that “[t]his legislation contains innovative provisions to combat offshore secrecy and end the use of tax havens such as Liechtenstein by U.S. citizens who are dodging their tax obligations, and ripping off America and honest American taxpayers in the process.”

Combined effort. IRS stresses that the national tax administrations of Australia, Canada, France, Italy, New Zealand, Sweden, United Kingdom, and the U.S., all member countries of the OECD’s Forum on Tax Administration (FTA), are working together following revelations that Liechtenstein accounts are being used for tax avoidance and evasion. IRS Acting Commissioner Linda Stiff stated that IRS will use all of its authority to fairly and effectively enforce U.S. tax laws and that “there is no safe hiding place for the proceeds of tax avoidance and evasion.” She went on to warn that “[a]nyone with hidden income and gains would be well-advised to make a prompt and complete disclosure to the Internal Revenue Service.”

Mike Habib, EA