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Data Leak Spurs Huge Offshore Tax Evasion Investigation 190

Posted by Soulskill
from the thousands-of-corporate-escape-pods-launched-in-response dept.
New submitter lxrocks writes "Tax authorities in the U.S., Britain, and Australia have announced they are working with a gigantic cache of leaked data that may be the beginnings of one of the largest tax investigations in history. The secret records are believed to include those obtained by the International Consortium of Investigative Journalists that lay bare the individuals behind covert companies and private trusts in the British Virgin Islands, the Cook Islands, Singapore and other offshore hideaways. The IRS said, 'There is nothing illegal about holding assets through offshore entities; however, such offshore arrangements are often used to avoid or evade tax liabilities on income represented by the principal or on the income generated by the underlying assets. In addition, advisors may be subject to civil penalties or criminal prosecution for promoting such arrangements as a means to avoid or evade tax liability or circumvent information reporting requirements.'"
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Data Leak Spurs Huge Offshore Tax Evasion Investigation

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  • Too big to fail (Score:3, Interesting)

    by DeathGrippe (2906227) on Saturday May 11, 2013 @05:59PM (#43697703)
    Nothing will come of this.
    • Re:Too big to jail (Score:5, Insightful)

      by Anonymous Coward on Saturday May 11, 2013 @06:04PM (#43697729)

      There, corrected it.

      • by dk20 (914954)
        Just wait until they start finding out who's names are on the list and see where it goes. Here in Canada we had the story of a Senator's husband running having accounts in tax havens. http://www.cbc.ca/m/rich/news/canada/story/2013/04/03/merchant-offshore-trust.html [www.cbc.ca]
        • Re:Too big to jail (Score:4, Insightful)

          by AlphaWolf_HK (692722) on Saturday May 11, 2013 @06:26PM (#43697857)

          I'll bet most of these are drug dealers, gamblers, or con artists hiding dirty money.

          Usually it's easier to simply pay your taxes. The stereotypical argument of the rich always evading taxes typically doesn't happen. It's just not worth the risk of having everything taken away from you if you already run a legitimate operation.

          • Re:Too big to jail (Score:5, Insightful)

            by Mitreya (579078) <mitreya@LISPgmail.com minus language> on Saturday May 11, 2013 @06:47PM (#43697997)

            The stereotypical argument of the rich always evading taxes typically doesn't happen.

            It's not that they always evade taxes (although that happens too), it's that they have full time staff dedicated to not paying taxes.

            Sometimes, it's just middle class people not having all the tools to find ways to sidestep taxes that the rich do.

            • This. My dad is in this business, and they're all neck deep in "tax avoidance" and many of them dabble in outright tax evasion.

              My dad also tries to do the same thing with very middle-class amounts of money...not much comes of it, I'm convinced he enjoys paperwork.

              • My dad is in this business, and they're all neck deep in "tax avoidance" and many of them dabble in outright tax evasion.

                Why on earth would you post this on a public forum?

                • I'm anonymous enough, why not? It's hardly a secret, ask any accountant.

                  Pointing it out for those who don't know has value.

                • by khallow (566160)
                  Why not? Hearsay isn't admissible as an admission to knowledge of a crime.
              • Re:Too big to jail (Score:5, Informative)

                by Sarten-X (1102295) on Saturday May 11, 2013 @11:16PM (#43699661) Homepage

                So, uh, which firm does your dad work for, exactly? I'm sure the IRS would love to know...

                Tax avoidance and tax evasion are markedly different. Tax avoidance is straightforward: You plan decisions and investments so that all money is taxed honestly, but at the lowest rate for the return. For example, if you need to raise cash, you can choose to sell a stagnant stock at a loss, which will raise the cash you need and build a capital loss credit, rather than selling a stock that's moving up and will likely make even more money than it will cost in capital gains.

                Tax evasion is where money is dishonestly hidden from being taxed, such as claiming the purchase of that new fishing rod is really a business expense for your car dealership, or moving it offshore to a country with lax enforcement and claiming to the IRS that you're paying taxes there, while telling the foreign government that it's being taxed here. It's pretty easy to tell when you're "dabbling" in tax evasion, because somewhere in the paper trail, somebody lies.

                Effectively avoiding taxes does require having enough money to be able to maneuver around so that the minimum taxes are paid. The taxpayer must have enough money available that they can move their profits into inaccessible places (foreign companies, unrealized investments, etc.) while still having cash to live on. Then when the time is right they can move that money back into something easier to work with, paying a lower tax rate and profiting from the time spent.

                Source: I work at a financial advising firm. We do some tax avoidance, but no tax evasion.

                • Tax avoidance is legal but IMO, can be horrendously unethical. And I think you vastly understate the difference it can make. GE paid zero taxes one year through tax "avoidance" and the famous tech megacorps are only "avoiding" as well.

                  • What's unethical is Congress not having produced a reasonable and effective tax code. This is their job. Seriously the quality of the work products of the US Congress is really bad.

                    Corporations are required by law to operate to the benefit of their stockholders. Not avoiding taxes is in fact illegal.

                    Also I'm amazed the idea of GE not paying taxes is still prevalent. It's not true.

                    http://www.factcheck.org/2012/04/warren-ge-pays-no-taxes/ [factcheck.org]

                • They functionally do the same harm and are chosen by the same groups of people.

                  They're both dishonest, one's just illegal.

                • by Xest (935314)

                  "Source: I work at a financial advising firm. We do some tax avoidance, but no tax evasion."

                  I think this gives you perhaps a rather distorted view. If what you said was true- that the distinction is clear, then the likes of HMRC in the UK wouldn't need to go to court and win some cases and lose others when it comes to avoidance vs. evasion.

                  The problem is that even when HMRC wins it often does little more than let them settle (sometimes less than they actually owed). This means it's still beneficial for firm

          • by Taco Cowboy (5327)

            Usually it's easier to simply pay your taxes

            Oh yes, I paid my taxes

            The $64 trillion dollar question is --- How much tax should I pay ?

            Especially when my tax money is being used for purposes that I find wanting

          • by slick7 (1703596)
            You forgot corrupt lawyers, judges, politicians, businessmen unless you piled them into conmen catagory.

            As for simply paying your taxes, I agree, if taxes were just, a small per centage across the board, not used for war or conquest, it didn't support a corrupt Executive, Judicial, Legislative government. Too many people are in need of proper food, water, housing, medical care, useful education.
    • by hydrofix (1253498)
      Even pessimistically speaking, even if it was conceivable that IRS would turn a blind eye on very big corporations and big-shoed politicians who are "too big to fail", I can't wrap my head around why would they ever not go after the property of private tax-dodging millionaires, who have little or no influence on politics and/or national economy.
      • I can't wrap my head around why would they ever not go after the property of private tax-dodging millionaires, who have little or no influence on politics and/or national economy.

        LOLWUT? These are the people who fund the super-PACs (and perhaps more importantly, give the 5/6-digit under-the-table "campaign donations") and run the megacorps, they have LOTS of political and economic influence.

      • by rtb61 (674572)

        The biggest reason to target those accounts is bribery. Easiest way to pay bribes is to have an off shore account and get the person receiving those bribes to open an offshore account. This enables the simple transfer of funds from one account to another. The person the spends that money whilst on overseas lavish holidays and personal items while off shore. So what funds were transferred to what account and why becomes very important in the passing of certain legislation and this is a global issue.

    • by ArsonSmith (13997)

      Actually they'll find all kinds of revenue from this. So much so that the debt will be paid off and the budgets all balanced for the rest of the future and everyone else will be paying lower taxes. And Obama care will be fully funded. And everyone else will have their tax burdens nearly wiped clean and... Ohh wait, i forgot that the government doesn't level off it just sucks in more and more and grows completely out of control as fast as it can until pow and war starts.

  • Not new news (Score:5, Informative)

    by Freshly Exhumed (105597) on Saturday May 11, 2013 @06:03PM (#43697719) Homepage

    This has been public knowledge since the end of March, yet there has been almost zero coverage of it in the mainstream U.S. media. Here's a bit of info in map form from the CBC on April 3, 2013:

    http://www.cbc.ca/news/interactives/icij-map/ [www.cbc.ca]

    and an interactive feature, also from the CBC:

    http://www.cbc.ca/news/interactives/offshore-tax-havens/ [www.cbc.ca]

  • by waddgodd (34934) on Saturday May 11, 2013 @06:21PM (#43697831) Homepage Journal

    My bet is that the actual investigation targets "who got this data" rather than "who does this data show cheated on their taxes". Mark my words, it'll be along the lines of "we can't use this data in court, so we HAVE to find out the source, so we can have them testify", only when the source comes forward, they'll find themselves jailed and the tax evaders will either never get prosecuted or make a sweethart deal.

    • by rahvin112 (446269) on Sunday May 12, 2013 @01:03AM (#43700125)

      You'll lose the bet. The IRS is on a tear right now to crack down on Tax Evasion. in fact they're offering a partial amnesty for coming forward voluntarily (normal penalties for offshore tax evasion is an immediate forfeiture of 50% of the balance, and then you owe the taxes you should have paid, depending on the situation you could end up owing more than the entire account is worth) where they are dramatically reducing the penalties and close to 5000 people have come forward.

      This is partially due to the prosecutions and other actions the IRS is taking against the banks hiding the money. The IRS has already put one of the oldest Swiss banks out of business and they are working on the others, they are generally offering significantly reduced fines to the banks if they provide the data to go after the evaders. It's open season on evaders right now and the IRS has had more traction in getting the banks to reveal the evaders in the last 3 years than they've had in more than 50 years.

      The IRS loves whistle-blowers and others that have handed over data. They've offered amnesty to hackers and whistle-blowers in the past that provided bank records that reveal tax evaders. Tax evasion is IRS priority number one for the last several years. Lots of people are coming forward out of fear because it's not just the money, you can actually end up in jail for it as well. All they need is the proof you've done it and not declared the assets and you are toast.

  • 32.3 trillion (Score:5, Insightful)

    by Anonymous Coward on Saturday May 11, 2013 @06:22PM (#43697833)

    100,000 people world wide..... that's 500BUCKS stolen for every man women and child on earth....are you feeling angry yet?
    This is one bank

    • by khallow (566160)
      The "tax is theft" people certainly would disagree. They would see that as $500 per person not stolen. Depends on your view, doesn't it?
      • Re:32.3 trillion (Score:5, Informative)

        by Maxo-Texas (864189) on Saturday May 11, 2013 @11:53PM (#43699871)

        If they don't want to be part of society, they should leave. Go live in somalia. There are no taxes there.

        If you want police, fire, sewers, working traffic lights, hospitals, a military, air traffic controllers, etc. etc. etc. then you will need to pay taxes.

        • by khallow (566160)
          If you don't want to be part of society, you can go live in Somalia too.

          If you want police, fire, sewers, working traffic lights, hospitals, a military, air traffic controllers, etc. etc. etc. then you will need to pay taxes.

          I don't see "want to be part of society" in that list. And I notice that you fatuously ignore that government spends a lot of money on things other than that small list.

          • fatÂuÂous
            [fach-oo-uhs]
            adjective
            1.
            foolish or inane, especially in an unconscious, complacent manner; silly.
            2.
            unreal; illusory.

            ---

            Do you want a short pithy post or do you want a 11,000 page comprehensive statement?

            I wasn't "fatuously" ignoring foolish expenses. But foolish expenses comprise under 3% of government spending. Wasteful spending (like the new unwanted tanks supported by both parties) is more common.

            If you want police protection, then you are saying you want to be part of society.
            If you

            • by khallow (566160)

              Do you want a short pithy post or do you want a 11,000 page comprehensive statement?

              I want you to get a clue.

              I wasn't "fatuously" ignoring foolish expenses.

              Nonsense.

              But foolish expenses comprise under 3% of government spending.

              You just contradicted yourself immediately. One can only make such a claim with near complete ignorance, or perhaps delusion of how governments acquire, budget, and spend money.

              ""Do you not know, my son, with how little wisdom the world is governed?"

  • Proof of wrongdoing? (Score:2, Interesting)

    by kervin (64171)

    This entire article is alarmist, and I even wonder if that information can be used in a court of law. As the IRS points out, here is nothing wrong in owning an offshore corporation or accounts. As long as you report it properly.

    International Business Corporations are ridiculously common. You don't have to be rich, many people with average income have those. It just depends on how you spend your money and the business you're in.

    • by Trepidity (597) <delirium-slashdo ... g ['ish' in gap]> on Saturday May 11, 2013 @07:16PM (#43698185)

      International Business Corporations are ridiculously common. You don't have to be rich, many people with average income have those.

      I would be surprised if that's true. How common are IBCs among people making, say, $50k (the median U.S. household income)? How about even $80k, or $120k? My guess is that they're negligible until you get to more like $500k+, though I'd be interested in some numbers either way.

    • by sethstorm (512897)

      The problem is that evasion (aka avoidance) as you describe it indicates a likelihood of hiding something that shouldn't be happening.

      To suggest that "average" people have them is to provide the rhetorical equivalent of a human shield.

      • by KGIII (973947)

        Tax evasion is illegal.

        Tax avoidance is legal and common sense.

        The two are not the same.

  • These people arent going to go to jail, as the data was obtained illegally.
    BUT, their accounts are now known, AND linked to current tax accounts... whats going to happen is more auditing on accounts, they then refer to this illegal data to then pressure the people to pay more tax.... the threat of court would be more than enough to get people to conform
    • by rahvin112 (446269)

      All the data, even if acquired illegally is admissible in court as long as the IRS wasn't involved in the illegal action that collected the data. If a guy breaks into your house and steals your laptop and finds kiddy porn on it, he could turn you in and the prosecutor will give him amnesty and they will use the data to put you in prison. The data would only be inadmissible if the police had been involved in the theft, but if they're hands are clean and the illegal action was by another party they are free t

      • Never heard of chain of custody? So a child pornographer broke into my house and stole my laptop and then got caught and decided to blame me. At least that's the point I'd expect any rational attorney to make.

    • While there is a very good case for tax cuts, the enforcement of existing tax code comes first along with a permanent disincentive against evasion/"avoidance".

  • This is what passes for journalism?

    Australian and British citizens as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

    Way to be fair, objective, and unbiased.

  • Thats all that will come of this. Earmarked endowments and guaranteed income for those who didnt benefit the first go round.
    Good colleges aint free you know. Esp if you have to afford a mistress and a gambling problem at the same time.

  • Password set to "Welcome123!"

  • Both cause the same harm, both show contempt for the citizens of the country evaded, and both represent and enable more criminal activity than any "legitimate" activity - yet only one of them gets punished.

    • The reason that only one of them gets punished is that only one of them is a violation of the law. I have a question, do you claim any deductions when you file your taxes?
      If you do, you practice tax avoidance.
      • by PPH (736903)

        Like the article says, "There is nothing illegal about holding assets through offshore entities". And if those offshore entities are in lower tax jurisdictions, that's just tax avoidance. As long as its all reported in accordance with the tax regulations of each jurisdiction no laws are broken.

        In addition, advisors may be subject to civil penalties or criminal prosecution for promoting such arrangements as a means to avoid or evade tax liability or circumvent information reporting requirements

        My investment advisors are located offshore. What they are promoting is legal within their jurisdiction.

        • As long as its all reported in accordance with the tax regulations of each jurisdiction no laws are broken.

          And that is true. However, just because you have reported it according to the laws in the offshore jurisdiction where those entities are located does not mean that U.S. laws(or those of other nations in which you may reside) for reporting are satisfied (I do not know the intricacies of tax law, but I do know that the U.S. has laws specifying that income gained in other countries, under certain circumstances, must be reported with one's U.S. tax return. I believe that some European countries have similar la

      • by sethstorm (512897)

        Never had to take or structure a deduction in a manner that wouldn't cause a competent accountant to take a long time to explain(without any prior involvement), involve jurisdictional games, nor would rely on untested territory of the tax code. I don't make a point of having my tax forms hit the proverbial hornets nest of Federal, State, and City revenue collections.

        If you're suggesting that taking a simple deduction on one's 1040 and receiving a negative sum or a lowered positive sum is the same league as

        • Taking a simple deduction on one's 1040 is tax avoidance. It is the same as some of the more complicated things that people do to avoid taxes. The laws were written to encourage people to do those things, just as the tax laws were written to encourage you to do the things which lead you to be able to take the deductions that you take. Now we can discuss whether the law should be written to encourage people to do certain things, but someone taking advantage of provisions in the law to avoid paying taxes is n

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