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IRS seeks to prosecute fraudulent tax havens

Some Kentucky residents may find that their tax returns are scrutinized by the IRS because the agency is looking to crack down on what it identifies as abusive tax schemes. The IRS is applying scrutiny to structured domestic and foreign trusts as well as more complicated methods that attempt to reduce a filer's tax liability by relying on the financial privacy laws in some foreign countries as well as credit or debit cards issued by foreign banks.

The IRS Criminal Investigation (CI) department is targeting white collar crimes that involve deliberate tax evasion. While the agency says that its focus is on those who promote or sell tax schemes to other people, accountants or lawyers who are involved in facilitating the transactions and reporting could also face investigation and charges. In addition, people who put their money into foreign investments can also face prosecution, especially if the agency alleges that they did so in a knowing attempt to avoid taxes.

The Internal Revenue Code labels the use of various entities to transmit funds and avoid detection as an abusive tax scheme. In some cases, offenders use trusts as well as various corporate structures in order to avoid tax bills. In other instances, they use offshore bank accounts, debit cards, credit cards or similar accounts in places with restricted financial reporting laws to achieve the same ends. For the most part, offenders direct their funds through multiple entities in order to reduce the visibility of their assets.

Some filers invest in these schemes because they responded to advertisements promoting a safe way to reduce their tax burdens. However, people with good intentions could still find themselves facing prosecution for tax fraud and other charges. Someone facing charges for white-collar crimes can work with an experienced criminal defense attorney to challenge prosecution assertions and present a strong defense before or during a trial.

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