Extending Time for Examinations of Taxpayers with Offshore Financial Activity
Although the Internal Revenue Service (IRS) has no definitive estimate of revenues lost due to tax noncompliance involving offshore activity, some have estimated the losses to total multibillions of dollars annually. The Internal Revenue Code limits the amount of time available to IRS to examine tax returns. GAO provided information on the amount of time taken to examine tax returns with an offshore component versus other tax returns. The data showed IRS takes much more time to examine these cases and sometimes either does not examine a case due to the statute of limitations or does not examine all tax issues due to the limited time available. In order to provide IRS with additional flexibility in combating offshore tax evasion schemes, GAO said that Congress
- should consider an exception to the 3-year civil statute of limitations assessment period for taxpayers involved in offshore financial activity. Similar to Congress's approach to unreported listed transactions, Congress should consider establishing a process wherein IRS would identify the types of offshore activity to which a statute exception would apply.
No relevant legislative changes have been made to the statute of limitations.
^ Back to topKey Reports
- Tax Administration: Additional Time Needed to Complete Offshore Tax Evasion Examinations
- GAO-07-237, March 30, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 40 pages) Accessible Text Recommendations (HTML)
