Sequestration Damages IRS Battle Against Tax Evasion
For many years, strict secrecy laws in Switzerland and the Cayman Islands allowed US taxpayers a low-risk way to evade taxes. In 2008, a whistleblower from UBS provided the government with the names of thousands of UBS clients who were hiding money to lower their tax bills. This disclosure substantially increased the IRS’ already heavy case load and prompted the agency to institute an amnesty program that allowed tax evaders to avoid jail time if they agreed to pay the full amount of the taxes owed and a 20% penalty. Lower penalty fees were imposed for accounts under $75,000. To date, over 10,000 claims have been processed.
Through it amnesty programs targeting Swiss banking customers, the IRS has recovered $5.5 billion in unpaid taxes and penalties since 2009. It is estimated, however, that government continues to lose $100 billion a year as a result of off-shore tax evasion. Due to a lack of funding and sequestration budget cuts, the amount lost tax revenue will increase. Recently, all IRS employees received a memo from the Acting Commissioner informing them that will be furloughed for 7 days during the summer, without pay.
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