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Tax Evasion Not Cured with QI Pacts

Tax Evasion under QI agreements

The IRS U.S. Court building in Washington DC, a courthouse where cases on the Trust Fund Recover Penalty (TFRP) are held

On Feb. 28 2014, Thomas Sawyer, senior counsel on international tax matters with the DOJ’s Tax Division, clarified that banks who have helped clients hide assets from the US government aren’t immune from penalty simply because they have complied with a qualified intermediary (“QI”) agreement.

Mistaken Beliefs

Sawyer addressed the misconception of some banks that may have decided not to come forward under the mistaken belief that their QI agreements will protect them from enforcement. “If you’re hearing that advice, you should be put on notice that that’s wrong,” Sawyer said. Another misconception is that all banks have to do is pay a fine and they can simply move forward, he said.

An official from the IRS also said that the IRS has attaches in multiple countries to assist with investigations, and is looking at whether taxpayers who renounce their citizenship may be doing so for tax evasion purposes.  Since the enactment of the Foreign Account Tax Compliance Act (“FATCA”), the government has seen an increase in these renunciations. It is very clear that the U.S. Government is committed to combating tax evasion. Foreign Financial Institutions holding U.S. Citizens bank accounts have to either comply with IRS under FATCA or face penalties or to the worst case, close the bank accounts.

Sooner or later, the government will catch up with non-compliant banks and non-compliant U.S. Citizens in foreign countries. There is no option to tax evasion.

About Anthony Verni

Anthony N. Verni is a Tax Attorney and Certified Public Accountant with over 20 years’ experience practicing before the Internal Revenue Service.Mr. Verni’s practice is focused on representing Expatriate and other U.S Taxpayers who have criminal and civil tax issues related to offshore tax evasion, money laundering, failure to file income tax returns, failure to report offshore income, failure to file FBAR reports and other tax related compliance and reporting concerns. Mr. Verni also represents individuals and businesses in connection with tax controversies involving income, estate and gift and employment taxes.
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