How the IRS is Curbing Tax Evasion

Posted on June 30, 2023

How the IRS is Curbing Tax Evasion

The IRS has been aggressively pursuing tax evasion and successfully brought billions of dollars of lost tax revenue back to the Treasury. Each year the Treasury loses billions of dollars in taxes, some due to tax evasion by large corporate companies that legally evade taxes and some by individuals that hide assets abroad. With the Foreign Account Tax Compliance Act (FATCA), taxpayers and foreign financial institutions are now under pressure more than ever before to not allow U.S. citizens to keep unaccounted money and assets in overseas banks.

By putting together FATCA agreements with more and more countries, the IRS is making it difficult for people to hide income and assets in overseas banks. There are heavy penalties and the possibility of imprisonment for evading taxes. Due to the strict punishment for tax evasion under FATCA, many people who have been evading taxes are getting back into compliance using the IRS’ Offshore Voluntary Disclosure Program (OVDP). Under OVDP, taxpayers can get back into compliance by paying much less in penalties while drastically reducing the possibility of imprisonment.

Along with FATCA and OVDP, there have also been serious talks of overhauling the tax code to make it simpler and more effective. Another purpose of overhauling the tax code is to fix the loopholes with which many multinationals and individuals evade taxes legally. These steps will help the IRS to reduce tax evasion in the future and also to bring back the dollars lost to tax evasion.



Leave a Reply

Your email address will not be published. Required fields are marked *