IRS To Target Tax Shelter Investors, High Income Taxpayers

by Philip Morton, Investors Offshore.com

16 September 2002

The US Internal Revenue Service on Thursday announced a new audit strategy designed to target higher income tax evaders who make use of abusive tax shelters, offshore credit cards, and trust structures to evade taxes.

Speaking last week, IRS Commissioner, Charles Rossotti revealed that the agency has adopted a new statistical method of selecting returns which have a high probability of unreported income, as the previous system 'did not focus on what was not on the return, on income that might not have been reported at all'.

'The real world is that we have limited resources,' he explained. 'We are trying to figure out as best we can where there is most threat to the system.'

It has been estimated that the 'tax gap' in the United States between the amount of revenue which should be collected and the amount that is actually received, is somewhere around the $207 billion mark annually. However, the public's perception has traditionally been that the IRS is more eager to pursue middle-income taxpayers for unpaid and underdeclared taxes than it is to tackle high earners.

The IRS Commissioner announced last week that he hopes that this new drive will dispel that 'unfair' impression.

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