Wednesday, February 27, 2008

IRS pursues U.S. citizens with Liechtenstein accounts for tax avoidance

The Internal Revenue Service announced that it has begun enforcement actions against more than 100 taxpayers who are avoiding taxes through accounts in Liechtenstein.

Australia, Canada, France, Italy, New Zealand, Sweden, the United Kingdom and the U.S. are working together to investigate their citizens using accounts in Liechtenstein for tax evasion and avoidance, the IRS said.

Monday, February 25, 2008

Stolen Liechtenstein data used in tax-evasion investigations

Data stolen from a unit of Liechtenstein's largest financial group, LGT Group Inc., apparently is being used for a tax-evasion probe by Germany, the Wall Street Journal reported today.

The Journal said that tax authorities in at least five other countries -- the U.S., U.K., France, Canada and Australia -- also are investigating client data tied to LGT. The newspaper quoted U.S. Sen. Carl Levin as saying the bank "apparently harbored numerous secret accounts which hid the taxable assets of thousands" of people around the globe.

Germany paid a former LGT employee about $6.2 million for the data, the Journal said, and hopes to use the data to recover hundreds of millions of dollars in back taxes.

Monday, February 11, 2008

IRS reviews common tax strategy

The Internal Revenue Service has asked agency staff to scrutinize the tax returns of wealthy people who use a strategy known as a variable prepaid forward contract, The New York Times reported.

The IRS published on its website a technical paper about the use of variable prepaid forward contracts, which corporate executives use to turn their stock holdings into cash and defer tax payments on them for several years.

The IRS concludes that the transactions are true sales and thus taxable to the executive. A corporate tax consultant told the Times that the unpaid taxes associated with variable prepaid forward contracts probably total billions of dollars annually.

Wednesday, February 6, 2008

Congressional support seen for president's proposals to increase tax compliance

Congress is likely to give the Internal Revenue Service more money to combat tax cheats, according to the Wall Street Journal.

Many of the president's proposals for the agency's budget have bipartisan support, including one that would require brokerage houses, mutual funds and other institutions to report to the IRS what investors pay for stocks and other securities. The aim of cost-basis reporting would be to improve compliance on capital-gains taxes.

In addition, Congress is expected to increase the IRS budget for enforcement activities, such as audits.