Thursday, May 03, 2007

IRS Hits Time Barriers on Offshore Tax Haven Audits

The IRS has cut back on audits of offshore taxpayers with income in tax havens because stallings tactics permit taxpayers to bring the three-year statute of limitations into play. Although only a relatively small number of taxpayers are involved, the amount of taxes involved per taxpayer is greater, as much as $100,000 in some cases running four or five years. Law professor Reuven Avi-Yonah of Michigan estimates that lost tax revenue from offshore activities could easy run to $50 billion.

Given the drastic measures presently under consideration by Congress to reduce the domestic tax gap, American taxpayers will not tolerate some crackdown on offshore havens. A proposed starting point: extend the statute of limitations on tax audits involving offshore tax havens to six years.


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