IRS Launches Largest Crackdown To Date On Illegal Offshore Trusts

Mike Godfrey, Tax-news.com, Washington

08 March 2001

In an operation described by the US Internal Revenue Service as its largest enforcement action to date, 300 IRS investigators have obtained more than three dozen search warrants in an extensive investigation into illegal offshore trusts and related tax-evasion schemes.

The crackdown came to light last week when IRS investigators arrested at least four individuals in Boston in connection with money-laundering offences. They were known to be involved in an illegal offshore trust operation known as Anderson Ark & Associates whose client funds were believed to be diverted from the US to Costa Rica to avoid paying taxes on the money. The IRS also performed searches in California where other major activities of scam offshore trusts were suspected to have taken place.

Since his appointment as head of the IRS Criminal Investigation Division in 1999, Mark E Matthews has endeavoured to focus on the organisers of illegal trusts and offshore banking. The IRS has stepped up its scrutiny of people who help individuals to disguise their income and make false deductions to reflect the serious problem of tax evasion. It is likely that millions of dollars of taxable income have been transferred to offshore accounts on behalf of hundreds of clients in the schemes it has been investigating.

IRS Commissioner Charles O Rossotti told the New York Times: 'Last week's historic enforcement activities send an unmistakable signal about IRS commitment to pursue investigations of promoters and their clients who would try to move money offshore to evade taxes.'

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