IRS Announces New Round of Amnesty for Tax Cheats

One of the truisms of the tax world is that people have been hiding assets from collectors for as long as collectors have existed. It follows that they will continue to do so until taxes either go away or we exist in some sort of Minority Report-esque society where it is impossible to violate the law. The main reason people cheat (or 'fudge' depending on viewpoints) taxes is obvious; the more one pays in taxes, the less they have remaining for personal consumption and/or savings in whatever form they choose. What is less obvious to the casual observer is that it is actually fairly easy to do so without getting caught, even on a fairly large level. The IRS, as maligned as it is, has limited resources (when congress gets out the budget pen, the taxman isn't high on the list of funding priorities). This of course means that limited resources go to enforcement. Most of these efforts are then focused on corporations or obvious and gross anomalies.

Therefore, most cheats gets away with it. Ultimately, even when cheats are caught, not much happens to them. Well-publicized situations like that of Wesley Snipes aside, the main goal even after violations occur is to account for lost revenues. To that end, the IRS will occasionally embark on amnesty programs intended to entice cheaters to come clean, serving the end of adding to the coffers of the government while allowing the taxpayers to avoid jail and court time. Typically penalties are reduced as well. One such effort in 2009 uncovered 15,000 individuals with offshore accounts. With that many people avoiding payment, and as most people who go through the trouble and expense of holding assets offshore typically have substantial assets to protect, the numbers could potentially be enormous. After the success of the 2009 program, the government announced a new round. Details can be found on Reuters here.