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Offshore account scrutiny also extends to Cayman Islands

It's been awhile since we last mentioned the Cayman Islands in this blog in connection with offshore tax compliance issues.

But U.S. authorities have clearly signaled their intention to extend their offshore enforcement crackdown to include accounts in many other places besides Switzerland. And we noted in our November 15 post last year, the Cayman Islands are among those places.

In this post, we will update you on developments concerning offshore account enforcement there.

The Wall Street Journal reported last week on three arrests of financial advisers who are accused of helping U.S. taxpayers use accounts in the Cayman Islands to hide assets that should have been disclosed to the IRS.

Though the arrests were in Miami, all three advisers were based in the Caymans. The arrests took place last month.

At a news conference following the arrests, a prosecutor with the Tax Division of the U.S. Justice Department sought to use the arrests to issue a warning about the possible consequences of failing to comply with offshore account reporting rules.

The prosecutor pointed out that the IRS is able to make use of information from multiple sources as it investigates offshore account compliance. This can include information from whistleblowers who are hoping to cash in on financial incentives.

And the subpoenas of foreign banks that we discussed in our November 15 post have greatly added to the pressure those banks are under to give up the names of U.S. taxpayers.

Giving up the names is a dig deal because eligibility for partial amnesty programs offered by the IRS, such as the Offshore Voluntary Disclosure Program (OVDP), is not available to taxpayers who are already under investigation.

Source: The Wall Street Journal, "Offshore Accounts: The Next Target," Laura Saunders, April 4, 2014

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