IRS Tax Evasion Disclosure Program Collects Only Small Percentage Of Money Lost

Government Agency Lets Millionaires Get Away With A Lot

While the IRS has ramped up its efforts to encourage tax cheats to come clean, the agency's voluntary disclosure programs have only reclaimed a small fraction of the money the government loses to tax evasion every year.

On Tuesday, the IRS announced it has collected more than $5 billion in taxes, interest and penalties from 33,000 voluntary disclosures of foreign accounts since 2009. But that figure is relatively small when compared to the $385 billion that the agency says it loses to tax evasion every year.

Since 2009, the IRS has launched several programs to incentivize the disclosure of offshore accounts. The Offshore Voluntary Disclosure Program reopened in January has seen 1,500 voluntary disclosures since, according to the IRS.

The programs offer lower penalties and no jail time if tax evaders voluntarily disclose their offshore accounts, according to CNN Money. The offshore penalty under the new voluntary disclosure program now is 27.5 percent, up from 25 percent in 2011, according to the IRS.

"We're going to crack down on people who are willfully hiding assets overseas and not meeting their obligations," IRS Commissioner Douglas Shulman told Bloomberg News on Tuesday. "And if there are people who are caught up in this who we can help get back in the system in a seamless way, then we’re going to do that."

A new law -- the Foreign Account Tax Compliance Act, which will take effect in January -- may prove more effective in raking in revenue lost to tax evasion. The law will require foreign banks to inform the IRS of Americans stashing cash overseas. In anticipation of the law, many foreign banks have been requiring their U.S. customers to sign forms to give up secrecy rights, inform the IRS of their accounts, let the banks to report information about their accounts to the IRS and waive the banks' legal liabilities.

Some aspects of the government's crackdown on tax evasion have been far less successful. The IRS has given just three payouts to tax evasion whistleblowers, in spite of the fact that more than 10,000 evasion-related claims have been filed with the agency since 2006, according to Bloomberg News.

Before You Go

Do you have info to share with HuffPost reporters? Here’s how.

Go to Homepage