IRS Criminal Investigation Unit Has Access to FATCA Information

Eric Hylton[1], deputy chief of the IRS Criminal Investigation Division, confirmed that information obtained through the Foreign Account Tax Compliance Act (“FATCA”) has been used by the department in its battle against worldwide tax evasion. According to him, cross-border tax crimes is on the top of the list of priorities of the Criminal Investigation Division (“CI”), that currently has special agents “strategically located around the world” and has been working closer than ever with foreign contributors.

FATCA was implemented in 2010 with the main objective of obtaining bank information related to U.S. citizens and residents and, therefore, discourage offshore tax evasion. In its hunt, the CI has joined from the Organization for Economic Co-operation and Development’s (“OECD”) special group, which focuses on tax crimes. Mr. Hylton also announced that the OECD has just opened an international tax crime academy in order to train agents on how to track money around the globe and that the CI Division’s plan is to create a new and specialized group comprised of twelve of the IRS’ best international criminal investigators.

The IRS and the Department of Justice are also actively combating taxpayers that insist on hiding money overseas. According to an official from the Department of Justice Tax Division, litigation on Foreign Bank Account Report (“FBAR”) issues is increasing and the number of cases that ended up in courts in 2017 has already passed the number of cases from the last three years in the aggregate.

In May 2017, during a conference, representatives from the IRS[2] gave notice that the Service is currently working on 100 potential criminal cases and 14,000 potential civil cases, based on information regarding Americans obtained through FATCA.

Due to the massive efforts from the IRS and the CI against tax evasion, taxpayers have taken action in order to join one of the amnesty programs available in order to become compliant with U.S. tax and reporting rules. The amnesty programs currently open are the Offshore Voluntary Disclosure Program (“OVDP”) and the Streamlined Procedures, applicable to taxpayers that willfully or non-willfully underpaid taxes in the U.S. or did not properly report income and/or financial assets kept overseas, inclusive filing the FBAR.

Considering the efforts the IRS and the CI have put in hunting down cross-border tax crimes, and that depending on the facts and circumstances, taxpayers may face civil penalties and even criminal prosecution, “wait and see” does not seem like a good strategy for taxpayers.



Maria Moller