Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Americans Report Hidden Income Under Quiet Disclosure Agreements
Author: Scarinci Hollenbeck, LLC
Date: May 13, 2013
Key Contacts
Back
The Internal Revenue Service has relied heavily on its Voluntary Offshore Disclosure Program to find tax law violators and recoup billions in hidden or unreported offshore tax funds, penalties and interest. However, a new government report reveals that the number of individuals reporting hidden income is on the rise, but some may be relying on another reporting method instead of the voluntary disclosure program.
The Government Accountability Office released new data indicating that thousands are likely relying on quiet disclosure agreements to report hidden income from foreign accounts without paying interest and penalties. Quiet disclosure agreements refer to a technique in which taxpayers attempt to avoid penalties by filing amended returns that report offshore income from previous years. As hidden income from foreign and offshore accounts can amount to billions of dollars, analysts note that quiet disclosure techniques – and the loss of interest and penalties – may lead to lost opportunities for the IRS to make progress in closing the tax gap.
The report found that the number of people reporting foreign accounts to the IRS almost doubled to 516,000 accounts from 2007 to 2010. The GAO noted that the sharp rise in people reporting account information suggests that fewer people are taking part in voluntary programs and simply reporting their income quietly.
“IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest and penalties that would otherwise be owed,” the report said. “But based on GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so.”
The GAO noted that only 39,000 people applied for the IRS amnesty program, meaning that thousands more are likely relying on quiet disclosures. While the IRS is not required to accept GAO recommendations for how to manage tax collection efforts, the agency is encouraging the IRS to analyze first-time offshore account reporting trends and implement new detection strategies to better identify those using the quiet disclosure method.
- Practices: Tax and Trusts & Estates
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now
Few situations create more uncertainty than learning that an employee has filed a whistleblower complaint. Questions arise immediately: Is the allegation legitimate? Should the employee be placed on leave? Do we need to notify our insurance carrier? Are we now prevented from disciplining the employee if there are unrelated ongoing work related issues? There is […]
Author: Sean M. Pena
Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses
When a business reaches the point where it can no longer service its debts or otherwise resolve its liabilities, management is often faced with a difficult question: is a bankruptcy filing necessary or is there another way to perform an orderly liquidation or sale of the business assets? While Chapters 7 and 11 of the […]
Author: John D. Giampolo
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know
For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]
Author: George McGowan
Estate Planning for Digital Assets Under New Jersey Law
As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]
Author: Marc J. Comer
The Role of Representation and Warranty Insurance in M&A Transactions
In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]
Author: George McGowan
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Author: Sean M. Pena
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.