The IRS is now sharing information with foreign governments

Josh Nowack

October 23, 2015

The Internal Revenue Code has long since included a provision that you are taxed on your WORLDWIDE income - from WHATEVER source derived.  In fact, it was the IRS that brought Al Capone because of tax matters (failure to report income).  To facilitate "voluntary" compliance, Congress passed FACTA which imposes all kinds of gnarly penalties for folks stashing money offshore and not disclosing it.  

Embedded in FACTA is the opportunity for the IRS to obtain information from foreign sources.  Most notably, the Switzerland, long known as a tax haven because of its banking secrecy laws, was coerced into compliance.  Now, Switzerland has turned over records to the IRS for prosecution of tax abuses.  The list of countries now cooperating with the IRS is pretty lengthy.  Click here for a list of countries that have signed on to cooperate with the IRS.  Some of the tax havens including the British Virgin Islands, the Cayman Islands, and Switzerland appear on the list.  Thus, if you have funds offshore, you can expect that they'll advise share asset information with the IRS.  

Converesely, these countries aren't just providing information to the United States, the United States is also providing information to these jurisdictions.  So if you have money stashed in the US but have a filing obligation abroad, be warned that the IRS is sharing information.  Now supposedly, the IRS is said to have reviewed the process to ensure your data is safe, but let's face it, the Internal Revenue computers have been hacked and compromised, so I'm not sold on their ability to ascertain security protocols of a foreign nation.  

Bottom line here is that the old school method of stashing cash offshore is very much ill-advised.  If you're making money, report it.


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