US DOJ Publishes Tax Prosecution Results

April 9, 2010 Offshore BankingOffshore TaxationTax HavensTaxation in USA

US Department of JusticeThe US Department of Justice (DOJ) has revealed its results and successes for the 2009 year in fighting tax fraud, scams and offshore tax evasion.

On March 7th the US DOJ issued a press release detailing the “highlights” of its tax enforcement efforts for the 2009 financial year. Throughout the year the DOJ successfully defended the Inland Revenue Service (IRS) from USD 665 million in tax refund claims; collected in excess of USD 260 million from affirmative litigation actions; obtained 135 guilty pleas and subsequent convictions in tax based crime trials; and participated in sentencing of 133 defendants of tax crimes. The DOJ also highlighted several prominent court cases in which financial and taxation professionals were prosecuted for offering services allegedly amounting to tax fraud and tax evasion through offshore accounts. The DOJ also pointed out and named tax preparers who were successfully prosecuted for the promotion fraudulent “tax redemption schemes”, and high-ranking individuals who were discovered to hold undeclared offshore assets and successfully prosecuted were named. The DOJ also claimed that its successful court actions against the Swiss bank UBS and against Bradley Birkenfeld, key UBS whistleblower, will further increase levels of tax compliance on both a national and international level.

In an assurance of the DOJ’s future success, John DiCicco, Acting Assistant Attorney General for the DOJ Tax Division, said, “The Department will continue to use all available law enforcement tools to recover tax revenue and to punish tax offenders.” In reply, Doug Shulman, IRS Commissioner, said, “The IRS appreciates the strong support of the Justice Department in our continuing work to enforce the nation’s tax laws.”

The US National Whistleblower Center (NWC) has already issued a counter-statement to the DOJ press release. Stephen Kohn, NWC Executive Director, has labeled the DOJ’s claim of higher compliance levels as “chutzpah”. Specifically, Stephen Kohn stated that the prosecution of Bradley Birkenfield will ultimately result in lower levels of whistleblowing and greater efforts by tax preparers who commit tax fraud to cover themselves, their clients, and evidence of any tax indiscretions.

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