The U.S. Internal Revenue Services said it does not have enough money to try and collect an estimated $280 billion in taxes, a portion of which is in Bahamian offshore banks.
Acting IRS Commissioner Bob Wenzel said Congress has not given the agency enough money to pay mandated salary increases, the Associated Press reported Tuesday.
Last month, the Justice Department and Internal Revenue Service posted an April 15 deadline for U.S. citizens, who have used offshore payment cards or other offshore financial arrangements to avoid U.S. taxes, and may be eligible to apply for the Offshore Voluntary Compliance Initiative (OVCI).
Summons enforcement petitions were filed against individuals who used a MasterCard payment card issued by the Leadenhall Bank & Trust Company in The Bahamas.
The enforcement petitions were filed after the individuals did not produce for examination the books or records requested in earlier IRS summonses.
But, William Jennings, Managing director of Leadenhall Bank & Trust Company told The Guardian on March 17, that it is the responsibility of the firm’s customers to disclose certain information to the U.S. Internal Revenue Service, and not that of the offshore bank.
Meanwhile, U.S. Government investigators said Tuesday that salary increases and unexpected expenses absorbed money the IRS had planned to use to track down tax evaders.
The General Accounting Office reported that even with budget increases and internal goals making compliance a top priority, the money devoted to collecting unpaid taxes declined from 2000 through 2002.
The IRS Oversight Board concluded the agency does not have enough money to chase down uncollected taxes calculated at $280 billion and growing.
“Particularly vexing to the Oversight Board is the number of potential examination and collection cases the IRS has identified but cannot pursue due to lack of resources,” board member Karen Hastie Williams told a House Ways and Means subcommittee. “For many of these cases, the IRS is only assigning resources to approximately 20 to 30 per cent of the cases it has identified.”
According to reports, the IRS recently reorganized its enforcement goals to target areas of fraud and abuse, including offshore accounts, low-income tax credit fraud and corporate tax shelters.
Unexpected costs eroded budget increases, however, and savings in other areas that were supposed to have been dedicated to enforcing tax compliance never materialised.
Acting Commissioner Wenzel said Congress has not given the agency enough money to pay mandated salary increases. Other costs also mounted – Unexpected security requirements costs $20 million, and postage costs went up by $22 million.
The GAO, Congress’ auditing arm, concluded that recent IRS history raises questions about the agency’s ability to put more money into its efforts to track down unpaid taxes.
The Oversight Board recommended adding $287 million to the president’s request to finance the agency at $10.4 billion next year. Part of the money would pay for the first year in a five-year plan to improve compliance with tax laws.
By Lindsay Thompson, The Nassau Guardian
