INTERNATIONAL TAX CHEATS BEWARE!

The United States, Canada, UK, Australia and the Netherlands have joined forces to battle international tax crimes and money laundering.  The coalition J5 alliance is in response to a request from the Organization for Economic Development (OECD) for countries to take more steps to stop tax crimes.  These countries will now pool their resources and expertise to conduct joint investigations.

J5’s initial priorities is to stop enablers facilitating offshore tax crimes, cybercrime and deal with the underreporting of cryptocurrencies.  This group has identified offshore structures and potential tools of tax crime and money laundering.  The organization has identified three key steps in its strategy:

1. Developing shared strategies to gather information and intelligence that will strengthen operational cooperation in matters of mutual interest, and target those who seek to commit transnational tax crime, cybercrime and launder the proceeds of crime

2. Driving strategies and procedures to conduct joint investigations and disrupt the activity of those who commit transnational tax crime, cybercrime, and also those who enable and assist money laundering

3. Collaborate on effective communications that reinforce that J5 is working together to tackle transnational tax crime, cybercrime and money laundering.

 

The J5 believes that this approach will have some outcomes, including enhancing existing investigation and intelligence programmes, identifying targets for new investigations, improving tactical intelligence, leading the wider community, and raising international awareness of the J5’s actions.

 

Cryptocurrency needs to be reported and there are some requirements, including filing FBARS if the cryptocurrency is located outside the United States.  The American Bar Association has requested a program similar to the Offshore Disclosure Program for offshore bank accounts and the response from the Internal Revenue Service has been nil.  It is imperative for holders of bitcoin and other digital currencies to make voluntary disclosures to eliminate potential criminal exposure in the future.

 

On Septemeber 28, 2018 the Offshore Voluntary Disclosure Program (OVDP)is ending.  To come within the program you must have at a minimum submitted the first phase of documentation which typically includes forms such as 14454 and 14457.  A preclearance certificate is not sufficient to enter OVDP.  International tax is an enforcement priority for the IRS along with the J5.  The IRS no longer needs individuals or businesses to come forward as the result of voluntary compliance from most financial institutions.  Within the last five years and the information obtained under the Foreign Account Tax Compliance Act (FACTA), more than 100 countries have entered into sharing agreements with the IRS.

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