Offshore Tax Cheats Include Big Names, IRS Says

The Internal Revenue Service has identified actors, doctors, lawyers, accountants, attorneys and high-end business people in its wide-ranging crackdown on offshore tax cheats, who are believed to be underpaying their taxes by an estimated $70 billion annually.

“These are names you would recognize,” said Dale Hart, a deputy IRS commissioner. “We are seeing people you would consider very high profile. We have hundreds of cases under investigation, and we believe there are billions of dollars at stake here.”

The IRS is prohibited by federal law from disclosing the names of taxpayers who are under investigation but are not yet indicted. However, in an interview Wednesday, Hart said hundreds of investigations had been launched as the result of a five-year effort to find and identify 1 million to 2 million individuals who are hiding assets offshore to evade taxes.

It’s not illegal to hold money in an offshore account. However, any income earned by a U.S. resident from an offshore account must be reported to the IRS. The government believes that about $3 trillion in unreported assets are held in secret accounts in tax-haven countries, costing the U.S. Treasury an estimated $70 billion annually.

Less than two weeks ago, the IRS asked a federal judge in Los Angeles to force local companies including Hughes Electronics Corp.; Walt Disney Co.; International PADI Inc., a diving firm with offices in Rancho Santa Margarita; and the Four Seasons hotel in Beverly Hills to turn over transaction records on customers whose credit cards are issued by banks in Antigua, Barbuda, Bahamas and the Cayman Islands.

It was the latest in a series of “John Doe” summonses aimed at gathering credit card charge slips with the names and sig- natures of individuals holding money in offshore accounts.

Credit cards have become the primary means for U.S. tax scofflaws to get access to the money they hold offshore, IRS officials said.

During the last two years, the IRS has subpoenaed information from major credit card issuers -- MasterCard, Visa and American Express Co. -- to obtain millions of charge slips and credit card numbers. However, in many instances, the charges are put through without the name of the account holder.

By gathering the charge information from vendors, the agency hopes to connect charges with names and create a paper trail sufficient to launch both civil and criminal prosecutions.

“We are learning a lot from the investigations that we have in stream,” Hart said, “and we are going to learn a lot more when we get results from the merchant summonses.”