Executive Fraud Blog

Estimated $100 Billion in tax fraud involved in shifting assets offshore

If that is the case then why is this not under investigation? The IRS has recently admitted that they are under constrained resources and have opted for more high profile investigations then tracking those tax shelters that hide assets off shore. The decline in prosecution referrals to the Justice Department has continued over the last 4 years following some of the highest shortly around the tech bust in 1999-2000. The referrals were totaling 3,037 in 2004 and have dropped to 2,720 by 2006, a decrease of 10%.

Critics of the decision to only target higher profile incidences claim that the threat/concern of getting caught wears off when there is a acknowledgement of lower investigations. Proponents of the high profile strategy offer examples of some of the recent success:

Walter Anderson - convicted of $170M due in federal taxes and sentence to 9 years in prison

KPMG - fined $456M for continuing to sell tax shelters to clients after they were told to stop by the federal government.

Iincreasing the number of investigators for the IRS and ensuring that the Justice Department will follow through on the referrals is the only way to ensure that these criminals with be charged for their crimes.