The IRS’s 2011 Voluntary Disclosure Initiative has made more in-roads to combating international tax evasion, securing 12,000 disclosures this year. The IRS has received 30,000 voluntary disclosures since it launched its first disclosure program in 2009 and collected a total of $2.7 billion.

Disclosure initiatives

The IRS initiative targets U.S. taxpayers with undisclosed income or assets offshore by offering them a chance to avoid potential criminal charges or to pay reduced penalties in exchange for their disclosures. This effectively gives taxpayers, who might have been in violation of federal tax law, a chance to meet their tax obligations.

The IRS touted the greatest success in two areas:

  • Criminal tax prosecutions. Taxpayers hiding assets offshore have received jail sentences of months or years, and substantial monetary fines.
  • Financial institutions. UBS AG, Switzerland’s largest bank, agreed to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.

Additional evidence of progress in the campaign against international tax evasion includes international tax agreements, increased cooperation with other governments, and stepped-up IRS and Justice Department criminal investigations of international tax evasion. These efforts have targeted bankers, promoters, and other facilitators of tax evasion, as well as taxpayers themselves.