With the IRS crackdown on offshore accounts in full swing, all tricks that were once used by banks for offshore tax evasion are no longer effective. The tactics below were presented to the U.S. Senate Permanent Subcommittee on Investigations, documenting the most common tax haven bank secrecy tricks.
- Code Names for Clients
- Pay Phones, not Business Phones
- Foreign Area Codes
- Undeclared Accounts
- Encrypted Computers
- Transfer Companies to Cover Tracks
- Foreign Shell Companies
- Fake Charitable Trusts
- Straw Man Settlors
- Captive Trustees
- Anonymous Wire Transfers
- Disguised Business Trips
- Counter-Surveillance Training
- Foreign Credit Cards
- Hold Mail
- Shred Files
Based on the listed items, it is very clear that the 
Department of Justice, Tax Division and Criminal Investigations IRS has developed a baseline of tactics and schemes that are indicators of undisclosed offshore accounts better known as “black accounts.” A United States taxpayer that is trying to assess his or her potential liability and need for legal representation should start with this list and see if any of the items match their facts and circumstances.
The most common reoccurring items are numbered accounts instead of including the client name, hold mail instructions, shred files and the movement of money from tax haven jurisdiction to tax haven jurisdiction (Example: Switzerland to Israel or Switzerland to India). It should be noted that there is a high level of sophistication and thought put into these items. In an effort to stay current, the Department of Justice, Tax Division and IRS use information gained from Voluntary Offshore Disclosures from 2009 to current day, Whistleblower information and on-going investigations into foreign banks and facilitators to build their arsenal of information on new tactics or schemes.
About Five Stone Tax Advisers
Five Stone Tax Advisers has years of experience negotiating directly with the IRS to get the best possible outcome for you. Our International Tax Advisory and Compliance unit has a team of tax attorneys, certified public accountants and enrolled agents that form a single sourced point of contact that will provide services for all the legal, compliance and financial reconstruction aspects of offshore account cases.
